Marriott Vacations stock target cut to $60 by Jefferies

Tuesday, Marriott Vacations Worldwide (NYSE:VAC) faced a reduction in its price target from Jefferies, with the new target set at $60.00, down from the previous $85.00. Despite the decrease, the firm maintained a Hold rating on the stock. The adjustment follows Jefferies’ revised expectations, which account for anticipated challenges in the timeshare industry. According to InvestingPro data, VAC currently trades at a P/E ratio of 9.5x and offers a substantial 5.98% dividend yield, suggesting potential value despite recent challenges.

Jefferies analysts cited several factors influencing their decision, including an expected deceleration in leisure demand and a less certain economic outlook. These conditions are projected to exert additional pressure on the growth of the company’s Volume Per Guest (VPG) metric and could lead to higher provisions for loan losses. The stock has experienced significant pressure, with InvestingPro data showing a 30% decline over the past six months, though the company maintains strong fundamentals with a current ratio of 3.34x.

In the forthcoming quarter, management at Marriott Vacations Worldwide is anticipated to address recent trends in their Vacation Ownership (VO) business. Topics expected to be covered include delinquency rates and the likelihood of customers to finance their purchases. This discussion, scheduled for May 7, 2025, is seen as a significant indicator for the company’s prospects leading up to the year 2025. InvestingPro analysis indicates the stock is currently trading below its Fair Value, with 12 additional exclusive ProTips available to subscribers.

The analyst’s commentary highlighted the importance of the upcoming management discourse: "We adjust our estimates to include our updated view on incremental pressure on VPG growth and loan loss provision due to our expectation of leisure demand deceleration and lower macro visibility, which could impact VAC. With the forthcoming quarter, we expect mgmt to discuss recent trends in VO business, delinquency, and financing propensity, and provide an important marker for the 2025 outlook. Reiterate Hold."

Investors and stakeholders in Marriott Vacations Worldwide are now looking ahead to the company’s next earnings call for further clarity on its financial health and strategic direction amidst these revised analyst expectations.

In other recent news, Marriott Vacations Worldwide has reported its fourth quarter 2024 adjusted EBITDA of $185 million, surpassing the consensus estimates of $170 million. This performance is attributed to increased contract sales and a slight improvement in EBITDA margin. Marriott Vacations also provided its initial guidance for 2024, projecting a 4% growth in contract sales. The company has secured new credit facilities totaling $1.25 billion, which includes an $800 million senior secured revolving credit facility and a $450 million delayed-draw term loan facility, aimed at enhancing its financial flexibility.

Morgan Stanley (NYSE:MS) has adjusted its stock rating for Marriott Vacations from Underweight to Equalweight, while lowering the price target from $67.00 to $57.00, citing ongoing challenges within the company. Meanwhile, Citizens JMP has maintained its Market Outperform rating with a $115.00 price target, expressing optimism about the company’s EBITDA enhancement initiatives. Barclays (LON:BARC) has reiterated its Overweight rating with a $97.00 price target, noting positive trends and potential upside to 2026 consensus expectations, despite acknowledging challenges related to the company’s credibility.

Marriott Vacations has refinanced its credit facility, adding a new $800 million revolving credit facility and a $450 million delayed-draw term loan facility. This strategic financial move is expected to provide the company with enhanced liquidity and financial flexibility. The refinancing initiative includes a reduction in interest spreads and offers the company flexibility in managing its convertible notes maturing in early 2026.

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