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On Friday, Goldman Sachs updated its assessment of Marriott Vacations Worldwide (NYSE:VAC), increasing the company’s price target from $48.00 to $55.00 while maintaining a Sell rating on the stock. Currently trading at $64.32, VAC has shown a strong 7.9% gain over the past week, despite a challenging -31.35% return over the past six months. The revision followed the company’s first-quarter earnings, which surpassed expectations, although the full-year outlook was not adjusted. According to InvestingPro data, five analysts have recently revised their earnings estimates downward for the upcoming period.
Marriott Vacations reported a decline in contract sales of approximately 4% during March and April, after showing stability in January. This downturn in sales comes despite the company’s projection of only about a 1% decline for the rest of the year. The lowered sales forecast has been somewhat mitigated by cost savings that have risen from a previous range of $15 million to $25 million to now $35 million, which analysts believe may include some anticipated savings from 2026. The company maintains a solid 55.8% gross profit margin and has consistently paid dividends for 12 consecutive years, with a current yield of 4.91%.
Despite these factors and the improved earnings, Goldman Sachs analysts remain cautious. They have increased their forecast for the company’s 2025 EBITDA from $708 million to $750 million, reflecting the first-quarter performance and slightly higher estimates for the second to fourth quarters. The analysts cited the need for more evidence of a positive trend in the Vacation Ownership Points (VOP) trajectory and the effectiveness of recent strategies aimed at increasing owner growth before changing their rating.
The report from Goldman Sachs underscores that while Marriott Vacations has shown some positive signs, the timeshare sector’s outlook remains uncertain. The company’s longer lead times for bookings compared to hotels are a particular area of focus, as analysts await further proof of sustained performance improvements.
In other recent news, Marriott Vacations Worldwide reported first-quarter 2025 earnings that exceeded analysts’ expectations, with an earnings per share (EPS) of $1.66, surpassing the forecasted $1.59. However, the company’s revenue slightly missed projections, coming in at $1.2 billion compared to the anticipated $1.22 billion. Despite this revenue shortfall, adjusted EBITDA rose 3% to $192 million, and development profit increased by 4%. The company also noted a 6% rise in first-time buyer sales, which is a positive indicator for attracting new customers. In terms of strategic moves, Marriott Vacations Worldwide is exploring the sale of non-core assets, such as the Sheraton Kauai Resort and a retail parcel in Waikiki, to optimize its portfolio. Analysts have not recently upgraded or downgraded the company’s stock, but the positive earnings report reflects effective cost management and operational efficiencies. The company’s modernization efforts are expected to deliver significant benefits by the end of 2026, with targeted cost savings and enhanced product offerings. These recent developments highlight Marriott Vacations Worldwide’s ongoing focus on growth and operational efficiency.
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