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On Tuesday, Jefferies maintained a Hold rating on Marriott International (NASDAQ:MAR) shares, with a consistent price target of $295.00. The firm’s analysis acknowledged the hotel chain’s fourth-quarter performance, which surpassed expectations, particularly noting the strong revenue per available room (RevPAR) as an unexpected positive development. Currently trading at $304.45, the stock has demonstrated remarkable momentum with a 40.39% gain over the past six months. According to InvestingPro analysis, the company’s stock is slightly overvalued at current levels. This robust performance occurred despite signs of slowing in certain segments and geographic markets.
The guidance for net unit growth (NUG) in 2025 was highlighted as a point of concern, as it is projected to be lower than that of Marriott’s industry counterparts. Jefferies pointed to this subdued NUG outlook as a potential slight negative for Marriott’s stock. Furthermore, the firm underscored the high valuation of the company, with an EBITDA multiple ranging between 17 and 18 times, which they view as a significant factor in their cautious stance on the stock. InvestingPro data reveals an even higher current EV/EBITDA multiple of 23.99x, supporting these valuation concerns. Dive deeper into Marriott’s valuation metrics and 18 additional exclusive ProTips with an InvestingPro subscription.
Additionally, the guidance for fee revenue growth was characterized as modest by Jefferies. This aspect, along with the high valuation and lower NUG forecast, forms the core of the bear case for Marriott International according to the firm.
Despite these concerns, the strong showing in the fourth quarter of 2024 suggests some resilience in Marriott’s business model. The company’s ability to outperform in RevPAR indicates a robust demand in the hospitality sector, even as it faces headwinds in certain areas.
Jefferies’ reiteration of the Hold rating and price target reflects a balanced view of Marriott’s current position, taking into account both the positive performance in the recent quarter and the cautious outlook for growth and valuation in the near future.
In other recent news, Marriott International has seen several developments. The company has added Sean Tresvant, Taco Bell CEO, to its board of directors, a move expected to foster future growth. In another development, Marriott has added Postcard Cabins, an outdoor hospitality brand, to its portfolio, reflecting the company’s commitment to offering diverse travel experiences.
Argus analysts have upgraded their price target for Marriott to $330, maintaining a buy rating due to the company’s strong liquidity and potential for earnings growth. Truist Securities also provided an analysis on the performance of U.S. and international hotels, noting a modest upside for fourth-quarter hotel revenue per available room (RevPAR).
In unrelated news, Elon Musk’s Department of Government Efficiency (DOGE) team disclosed the illegal transfer of $59 million by the Federal Emergency Management Agency (FEMA) to luxury hotels in NYC to house undocumented immigrants. The DOGE team is initiating a clawback to recover the misused funds.
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