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On Wednesday, Citi reaffirmed its Neutral rating on shares of Marriott International (NASDAQ:MAR), maintaining a price target of $250.00. The decision follows a review and update of the company's financial model, taking into account the actual results from the second quarter of 2024 and new operating assumptions.
These include a lowered company outlook and revised expectations for Revenue per Available Room (RevPAR) progression throughout the year, in addition to updated interest rate assumptions.
The updated model has led to a slight increase in the projected operating earnings per share (EPS) for the third quarter of 2024, now estimated at $2.33, up from the previous $2.32. However, the forecast for the full year 2024 operating EPS has been revised downward to $9.38 from the earlier projection of $9.58. This adjustment reflects the impact of the changed assumptions on the company's expected annual performance.
Marriott International's second quarter performance and the updated operating assumptions have been key factors in Citi's reassessment of the hotel giant's stock. The revised estimates provide investors with the latest expectations for the company's financial trajectory in the upcoming quarters.
As one of the leading hotel companies worldwide, Marriott's financial health is closely monitored by investors and industry analysts. The Neutral rating indicates that Citi's outlook on the stock remains unchanged despite the updated financial figures and assumptions.
Investors and stakeholders in Marriott International will continue to observe how the company's performance aligns with these revised expectations and whether the changes in the economic environment, including interest rates, will significantly impact its operations in the remaining quarters of 2024.
In other recent news, Marriott International has reported a series of significant developments. The company has recently issued $1.5 billion in new debt securities, with net proceeds totaling approximately $1.48 billion, intended for general corporate purposes. This move aligns with Marriott's broader financial strategy.
Moreover, Marriott has entered a long-term licensing agreement with Sonder Holdings, expanding its portfolio with over 9,000 rooms from Sonder's properties by the year's end and an additional 1,500 rooms in the pipeline. This partnership is projected to boost Marriott's net room growth to between 6 to 6.5 percent by 2024.
Marriott also announced a temporary suspension of trading under its employee benefit plans, due to the Marriott Retirement Savings Plan transitioning to a new plan recordkeeper. During this blackout period, employees will not be able to make any changes to their investments or contribution rates.
Furthermore, Marriott reported robust second-quarter performance in 2024, with a 6% year-over-year increase in net rooms and nearly a 5% rise in global revenue per available room.
However, Mizuho maintained a neutral stance on Marriott's stock, adjusting the price target due to concerns including a slowdown in China, deceleration in hotel leisure spending, and questions regarding the sustainability of Marriott's earnings algorithm. These are the recent developments that highlight Marriott's strategic partnerships, financial maneuvers, and performance metrics.
InvestingPro Insights
In light of Citi's neutral stance on Marriott International (NASDAQ:MAR), real-time metrics and InvestingPro Tips provide a deeper look into the company's financial standing. The adjusted market capitalization of Marriott stands at $62.83 billion, reflecting a substantial presence in the hospitality industry.
A notable InvestingPro Tip is Marriott's impressive gross profit margin, which has reached 81.77% over the last twelve months as of Q2 2024. This indicates efficient cost control and a strong pricing strategy within the company's operations.
Another key metric is the P/E Ratio, currently at 22.21, which suggests investors are willing to pay a premium for Marriott's earnings. This is further corroborated by the company's solid operating income margin of 60.67%, which demonstrates the company's ability to translate revenue into profit effectively.
However, it is important to note that Marriott is trading at a high P/E ratio relative to near-term earnings growth, as highlighted by one of the InvestingPro Tips. This, coupled with the fact that 14 analysts have revised their earnings downwards for the upcoming period, may warrant caution for potential investors.
For those looking to delve further into Marriott International's financials, there are over 10 additional InvestingPro Tips available, offering detailed insights and metrics that could influence investment decisions. With the next earnings date set for October 31, 2024, stakeholders will be keen to see how the company's performance aligns with these financial indicators.
Visit InvestingPro for more exclusive tips and data: https://www.investing.com/pro/MAR
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