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On Wednesday, JPMorgan analyst Matthew Boss upgraded Vail Resorts (NYSE:MTN) stock rating from Underweight to Neutral, maintaining a price target of $167.00. Currently trading at $151.50, the stock sits between analyst targets ranging from $152 to $247. Boss’s assessment aligns with Vail Resorts’ financial projections, noting that the company’s expected Resort EBITDA for fiscal year 2025 is consistent with management’s forecast, which anticipates EBITDA to be in the lower half of the $841-877 million range. According to InvestingPro data, the company’s last twelve months EBITDA stands at $850.68 million.
The upgrade comes after observing Vail Resorts’ stock performance relative to market trends. Over the past 12 months, Vail Resorts’ shares have decreased by 20%, in contrast to the S&P 500’s 12% increase. This decline in stock value has led to a reassessment of the company’s risk/reward balance.
Boss’s evaluation is based on a detailed financial analysis. He projects a Resort EBITDA of $847 million for fiscal year 2025, which remains unchanged from previous estimates. For fiscal year 2026, the projection is set at $886 million, slightly below the Street’s expectation of $905 million. The price target is grounded in a valuation multiple of approximately 10 times enterprise value to EBITDA (currently at 9.9x), reflecting Vail Resorts’ anticipated top-line growth and EBITDA margin profile over the next few years, compared to the five-year average before the pandemic. The company maintains a healthy gross profit margin of 44.5% and has demonstrated consistent revenue growth with a 5-year CAGR of 5%.
The unchanged price target of $167 is supported by linear regression analysis that takes into account the company’s growth and margin profile from fiscal years 2025 to 2027. Boss suggests that there is approximately $100 of equity value per share that could be realized through idiosyncratic opportunities, such as a 250 basis point operating margin recapture based on historical valuation multiples.
In summary, JPMorgan’s upgrade to a Neutral rating reflects a view that Vail Resorts’ shares are now fairly valued, considering both the recent underperformance in the stock market and the potential for margin improvement identified by their analysis. Boss’s commentary indicates a balanced perspective on the company’s financial outlook and stock valuation. However, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which includes detailed analysis of Vail Resorts’ financial health, growth prospects, and valuation metrics.
In other recent news, Vail Resorts has announced a significant leadership change, with Rob Katz returning as Chief Executive Officer. This move comes as Kirsten Lynch steps down from her roles as CEO and director, although she will remain in an advisory capacity for a transitional period. The company has reaffirmed its fiscal 2025 guidance, indicating that Resort Reported EBITDA is expected to be in the lower half of the previously issued range, excluding one-time costs associated with the CEO transition. Early season pass sales are reportedly in line with trends from the April 2025 metrics release, providing some insight into the company’s financial outlook.
In analyst updates, Stifel has revised its price target for Vail Resorts stock to $183 from $217, while maintaining a Buy rating, citing concerns over financial performance despite favorable conditions. Meanwhile, BofA Securities has lowered its price target to $160 from $185, maintaining a Neutral rating, due to late-season risks and weaker than anticipated visitation data. The company reported a decline in skier visits, with season-to-date visitation down 3.6%, further influencing these revisions.
Despite these challenges, Vail Resorts remains committed to long-term growth and efficiency, supported by a $100 million resource efficiency initiative. Stifel’s recent comments from the annual investor conference highlighted positive developments in Vail Resorts’ rental service and customer satisfaction, suggesting potential for future growth. The forthcoming third-quarter earnings report is anticipated to provide further insights into the company’s financial performance and strategic direction.
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