Trump announces trade deal with EU following months of negotiations
On Monday, Goldman Sachs analysts adjusted their stance on Marriott International (NASDAQ:MAR) stock, downgrading it from Buy to Neutral. The firm also reduced the price target for Marriott shares to $245 from the previous target of $313, for the hospitality giant currently valued at $62 billion with a P/E ratio of 27. The decision follows a detailed evaluation of the current economic landscape and its potential impacts on the hospitality sector. According to InvestingPro data, the stock is trading at $225, between its 52-week range of $205-$308.
Goldman Sachs cited increased macroeconomic volatility and consumer pressures as primary reasons for the downgrade. These factors are anticipated to challenge segments that are sensitive to economic fluctuations, such as Incentive Management Fees (IMF), Credit Card revenues, and Owned & Leased properties. Despite recognizing Marriott’s business model as top-tier within the industry, with strong cash flow per share and a robust balance sheet, the analysts expressed concerns about the current valuations.
The analysts noted that Marriott’s stock valuations remain higher than the average between 2016 and 2019, a period they consider to be mid to late in the economic cycle. This observation suggests that the stock might be priced optimistically in light of potential headwinds. Moreover, Goldman Sachs believes that consensus estimates for Marriott, particularly regarding IMF and non-RevPAR (Revenue Per Available Room) fees, are overly ambitious and may not fully account for the expected challenges.
Goldman Sachs highlighted the inherent strengths of Marriott’s business, emphasizing its best-in-class operations and the company’s ability to generate significant cash flow. According to InvestingPro analysis, the stock appears slightly undervalued based on its proprietary Fair Value model. Additionally, InvestingPro has identified 8 key investment tips for Marriott, including strong returns over the past five years and consistent dividend growth. For detailed insights and comprehensive analysis, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
Investors in Marriott International will likely monitor these developments closely, as the stock’s future performance may be influenced by the broader economic environment and the company’s ability to navigate potential sector-specific headwinds. The new price target set by Goldman Sachs reflects a more cautious outlook for the hospitality giant in the near term, though the company maintains strong fundamentals with a 5% revenue growth and healthy earnings of $8.33 per share over the last twelve months.
In other recent news, Marriott International has issued $2 billion in new debt for corporate purposes, as outlined in a recent SEC filing. The company plans to utilize the net proceeds, approximately $1.96 billion, for general corporate purposes, including potential acquisitions and stock repurchases. Additionally, Marriott has expanded its portfolio by launching the City Express by Marriott brand in the U.S. midscale market, starting with a property in Duluth, Georgia, and plans to open over a dozen more properties in the region. UBS analysts have maintained a Neutral rating on Marriott, with a price target of $301, noting the company’s ongoing digital transformation aimed at modernizing its reservation system. Meanwhile, Mizuho (NYSE:MFG) Securities has raised its price target for Marriott to $293 from $246, maintaining a Neutral rating while addressing concerns over its earnings algorithm. The firm anticipates that residential branding will positively impact earnings growth by 2026. In related developments, Truist Securities has reaffirmed a Buy rating for Marriott Vacations Worldwide, with a target of $142, addressing investor concerns over the company’s stock performance. These recent developments reflect Marriott’s strategic efforts to strengthen its financial position and expand its market presence.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.