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On Friday, Deutsche Bank (ETR:DBKGn) analysts showed a positive stance on Melia Hotels International SA (BME:MEL:SM) (OTC: SMIZF), as they increased the company’s price target from EUR9.00 to EUR9.50 while maintaining a Buy rating on the stock. The revision follows Melia Hotels’ recent publication of its financial results for the full year 2024, which aligned with consensus expectations.
The hotel group had its property assets revalued by CBRE (NYSE:CBRE), with the gross valuation reported at approximately €5.3 billion. Consequently, the market’s net asset value (NAV) for Melia’s owned assets is around €3.4 billion, translating to €17-18 per share. Analysts at Deutsche Bank highlighted several factors contributing to an optimistic outlook for Melia Hotels, including expectations of a positive first quarter, a 16% increase in the MICE (Meetings, Incentives, Conferences, and Exhibitions) segment at the start of the year, and projected revenue per available room (RevPAR) growth in FY25 that is slightly above the industry average of 2-4%.
Additionally, Melia Hotels has ambitious expansion plans, with intentions to sign 25 new hotels and open roughly 20 new properties. The positive developments and strategic initiatives have led Deutsche Bank analysts to update their financial model for Melia Hotels. The adjustments include changes in supply, slight upgrades to RevPAR forecasts, and modifications to profitability expectations. These updates have resulted in an increase in the projected earnings per share (EPS) for fiscal years 2025-2026 by 3.3-3.8%.
The reevaluation of Melia Hotels’ assets and the subsequent price target increase by Deutsche Bank reflect a measure of confidence in the hotel chain’s growth prospects and financial health. The company’s strategy to expand its portfolio through new signings and openings is set to play a significant role in its performance in the coming years.
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