Goldman Sachs Sees Bright Future for Marriott with Recovery Potential

Author: Ryan Hughes Updated: 09-18-2024 02:39 PM

Goldman Sachs Initiates Coverage on Marriott International

Recently, Goldman Sachs has started following Marriott International (NASDAQ: MAR) shares, expressing a positive sentiment by assigning a Buy rating. The firm has established a price target of $267.00, indicating a projected increase of 15% within the next year. This optimistic outlook is based on several critical factors expected to elevate Marriott's performance in the near future.

Understanding the Hotel Market Dynamics

Goldman Sachs believes that the slowdown in Revenue per Available Room (RevPAR), which is a crucial metric within the hotel industry, is already factored into Marriott's stock price. Nevertheless, they foresee a continued recovery in business and group travel as primary drivers for Marriott's growth. For instance, while leisure travel has shown fizzles, the upward trajectory of business travel is noteworthy, positioning Marriott in a favorable scenario as it attempts to emerge from the pandemic's shadow.

Marriott's Strong Market Position

Marriott’s diverse portfolio, which predominantly features full-service, luxury, and urban hotels in the United States, is expected to recover more robustly than the leisure travel sector. This variety ensures that Marriott can attract high-end clientele, particularly as business travel regains its momentum. Currently, 43% of Marriott's rooms cater to higher-end leisure, indicating a strategic focus that shields it against downturns in lower-end segments.

Recent Developments for Marriott International

Marriott has been in the news for several significant developments lately. An analyst from Bernstein SocGen Group upgraded the company’s stock, highlighting its undervaluation and growth potential with a new price target of $262.00, which reflects a general confidence in Marriott's future.

Strategic Moves for Growth

This month, Marriott announced a long-term licensing agreement with Sonder Holdings, which will introduce over 9,000 new rooms to its portfolio by the end of the year. With an additional 1,500 rooms in the pipeline, this strategy aims to expand Marriott's net room growth to approximately 6 to 6.5 percent by 2024. Such moves highlight Marriott's strategy in revitalizing its market presence and adapting in a post-pandemic era.

Challenges Ahead and Ongoing Strategies

Despite the optimism, some banks like Citi and Mizuho have taken a more neutral position on Marriott's shares, adjusting their price targets in response to various industry challenges. Citi, for instance, has made a slight upward adjustment to its projected operating earnings per share (EPS) for the third quarter of 2024, but it has also downwardly revised the full-year 2024 operating EPS.

Financial Position and Room for Growth

Recently, Marriott issued $1.5 billion in new debt securities, generating net proceeds of about $1.48 billion to support various corporate needs. The company's second quarter report for 2024 revealed a 6% year-over-year climb in net rooms and nearly a 5% increase in global revenue per available room. These statistics are a testament to Marriott's ongoing recovery and growth momentum.

Insights from Recent Data

As Marriott International (NASDAQ: MAR) receives a favorable outlook from Goldman Sachs, obtaining real-time data and insights further contextualize the prospects for potential investors. The company’s leadership has notably engaged in share buybacks, underscoring a belief in the company's consistent value.

An Attractive Market Position

According to recent data, Marriott boasts a market capitalization of $66.33 billion, currently trading with a P/E ratio of 23.34. The company has experienced a revenue growth of 8.34% over the last twelve months as of Q2 2024. However, investors should exercise caution, as the stock's high P/E ratio paired with a PEG ratio of 1.69 indicates that the price may be reflecting expectations for future growth.

Frequently Asked Questions

What rating did Goldman Sachs assign to Marriott International?

Goldman Sachs assigned a Buy rating to Marriott International, indicating a positive outlook for the company's stock.

What is the price target set by Goldman Sachs for Marriott?

The price target set by Goldman Sachs for Marriott International is $267.00.

How has the recovery trend in business travel impacted Marriott?

The recovery in business travel is expected to provide significant growth opportunities for Marriott, particularly since their focus includes luxury and upscale accommodations.

What recent strategic move has Marriott undertaken?

Marriott recently entered into a long-term licensing agreement with Sonder Holdings, which will add over 9,000 new rooms to their portfolio.

What are some of Marriott's recent financial developments?

Marriott reported a year-over-year increase in net rooms and global revenue per available room, reflecting its successful recovery progress.

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