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On Thursday, Tigress Financial Partners issued an update on Travel + Leisure Co. (NYSE:TNL) shares, increasing the 12-month price target to $70.00 and maintaining a Buy rating on the stock. The firm’s analysis highlights the company’s successful implementation of property development strategies and the forging of new marketing partnerships. These elements, along with Travel + Leisure’s effective use of technology to enhance the customer experience, are expected to result in continued revenue and cash flow growth. According to InvestingPro data, TNL trades at an attractive P/E ratio of 9.2x and has demonstrated strong financial health with a "GOOD" overall score. The stock has shown impressive momentum with a 31% gain over the past six months.
Travel + Leisure has been experiencing robust consumer spending on travel, which is further supported by new partnerships and product development, including an updated app. The company’s fourth-quarter revenue for 2024 was reported at $975 million, with Vacation Ownership revenue climbing 5% to $813 million. Notably, Net Vacation Ownership Interest (VOI) sales saw an 11% increase to $456 million, despite a higher provision rate. InvestingPro analysis reveals the company maintains strong profitability with a gross margin of 49% and has consistently raised its dividend for three consecutive years. Want deeper insights? InvestingPro offers 8 more exclusive tips and comprehensive financial metrics for TNL.
The company’s Travel and Membership segment, however, faced a slight revenue decline of 1% to $157 million. This was attributed to a 4% decrease in subscription revenue, somewhat offset by a 1% rise in transaction revenue. This was bolstered by a strong Travel Club performance, which showed a 9% increase in transactions and a 6% increase in revenue per transaction.
Travel + Leisure has also been proactive in enhancing its digital presence. Following the launch of the new Club Wyndham app in late 2024, the app has already achieved over 40,000 downloads and received over 80% positive reviews. In addition, Travel + Leisure has entered into several strategic partnerships in 2024, including with Allegiant Airlines and Live Nation, to facilitate cross-marketing and lead generation, which is expected to incrementally increase tour opportunities over multiple years.
The acquisition of Accor (EPA:ACCP) Vacation Club is seen as a significant growth driver for Travel + Leisure, expanding its geographic reach, customer base, and development pipeline. The company is also focusing on improving member satisfaction for its second-largest club, WorldMark by Wyndham, with plans to overhaul its website and launch a new app in 2025.
Travel + Leisure is preparing for the introduction of the Sports Illustrated brand, with sales set to start later in 2025. The company’s strong brand equity, solid execution, and ability to increase fee revenue through membership services, as well as in-property spending and services, are contributing to an increasing return on capital and economic profit, which in turn enhances shareholder value.
In 2024, Travel + Leisure demonstrated its commitment to returning value to shareholders by repurchasing $235 million of its stock. The company has also proposed a 12% increase in its quarterly dividend to $0.56 per share, pending board approval. With these developments, Tigress Financial Partners believes there is further upside to the stock, and the new price target of $70 reflects a potential return, including dividends, of over 30% from current levels. InvestingPro data shows TNL has maintained dividend payments for 18 consecutive years and currently offers a 3.65% dividend yield. The company’s strong financial position is evidenced by its healthy current ratio of 4.02, indicating excellent liquidity. Discover TNL’s complete financial story with InvestingPro’s comprehensive Research Report, part of our coverage of 1,400+ US stocks.
In other recent news, Travel + Leisure Co reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $1.72, compared to the forecasted $1.62. The company also recorded a 5% increase in Q4 Adjusted EBITDA, amounting to $252 million, slightly exceeding consensus estimates. For the fiscal year 2025, Travel + Leisure projects an Adjusted EBITDA between $955 million and $985 million, with Gross Vacation Ownership Interest (VOI) Sales expected to reach $2.4 billion to $2.5 billion. Analyst firms have responded to these results with various adjustments to their price targets for Travel + Leisure. Mizuho (NYSE:MFG) Securities raised its price target to $64 from $55, maintaining a neutral rating, while Goldman Sachs increased its target to $62 from $59, also retaining a neutral rating. Citizens JMP set a higher target of $60, up from $55, and maintained a Market Outperform rating. Analysts from these firms noted the company’s strong financial performance and cautious yet promising guidance for 2025. The overall sentiment reflects cautious optimism about Travel + Leisure’s financial trajectory and future growth potential.
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