EU and US could reach trade deal this weekend - Reuters
On Monday, UBS analysts maintained their Neutral rating on Marriott International (NASDAQ:MAR) shares, reiterating a price target of $301.00. The stock, currently trading at $213.25, has experienced a challenging year with a 22.9% decline year-to-date. According to InvestingPro analysis, Marriott appears undervalued against its Fair Value estimate. The firm's commentary highlighted the potential benefits of hotel companies with large loyalty programs forming partnerships with cruise lines. This synergy could offer a broader array of leisure options for loyalty program members, allowing for cruise line experiences as part of hotel rewards programs.
The UBS commentary also touched on the significant digital transformation Marriott is currently undertaking. This tech overhaul is aimed at modernizing the company's reservation system and technology stack across all brands and countries. The company's strong financial position, with impressive gross profit margins of 81.87% and a market capitalization of $58.6 billion, provides solid backing for this ambitious technological initiative. The process is expected to span several years and is seen as crucial, especially in light of past system issues experienced with the Starwood integration.
Marriott has indicated that they are concentrating all efforts on this digital transition, which is a priority for the company. The new system is designed to optimize revenue management for every hotel reservation, including specific room features such as balconies and views, and the pre-selling of dinner and spa reservations. However, these enhancements are projected to be more impactful post-2026 rather than in the near term.
The UBS analysts noted that while the new system could potentially open doors for future partnerships, including with cruise lines, such collaborations are not anticipated to happen soon due to the current focus on the technological shift. Marriott's commitment to this extensive project underlines the company's awareness of the importance of advanced systems, following previous challenges with the Starwood systems integration.
The reiterated price target of $301.00 by UBS reflects the firm's current valuation of Marriott stock based on these ongoing and future initiatives. InvestingPro subscribers have access to 12 additional key insights about Marriott, including detailed financial health metrics and comprehensive valuation analysis. For a deeper understanding of Marriott's investment potential, check out the exclusive Pro Research Report, part of the extensive coverage available for over 1,400 US stocks.
In other recent news, Marriott International has made significant strides in its financial and strategic operations. The company issued $2 billion in new debt, with the proceeds intended for general corporate purposes, such as working capital and potential acquisitions. This move is part of Marriott's broader financial strategy to strengthen its balance sheet as the hospitality industry continues its recovery. Additionally, Stifel analysts raised their price target for Marriott shares to $295, citing the company's strong fourth-quarter performance, which exceeded both their estimates and market expectations. The adjusted earnings per share reached $2.45, surpassing the anticipated figures due to higher franchise fees and lower administrative expenses.
In another development, Marriott has ventured into the midscale market with the opening of its first City Express by Marriott property in Duluth, Georgia. This marks the beginning of a planned expansion across North America, with over a dozen properties expected to open by the end of the year. Mizuho (NYSE:MFG) Securities also adjusted its price target for Marriott, increasing it to $293, while maintaining a Neutral rating. The firm noted concerns over the compression of Marriott's earnings algorithm but acknowledged potential growth opportunities.
Meanwhile, Truist Securities maintained a Buy rating on Marriott Vacations Worldwide, highlighting the fixed nature of its fees to Marriott International and the potential for future growth. Investors are keenly awaiting Marriott Vacations' upcoming earnings report to assess its financial health. These developments reflect Marriott's ongoing efforts to expand its market presence and enhance its financial standing.
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