Shares of Hotel Giant Marriott Rise on Q4 Earnings Beat

Shares of global hotel giant Marriott jumped nearly 3% in pre-market trading on Tuesday after the hospitality company reported better-than-expected earnings and revenue in the fourth quarter, largely driven by higher vaccination rates and the relaxation of travel restrictions during the holiday season.

The Bethesda Maryland-based company reported a net income of $468 million, or $1.42 per share, compared to a loss of $164 million, or 50 cents per share, a year ago. The U.S. hotel operator reported quarterly adjusted earnings per share of $1.30, beating the Wall Street consensus estimates of $1.04 per share.

The company’s revenue more than doubled to $4.45 billion. That too surpassed the market expectations of $3.98 billion. The increase in travel during the holiday quarter as well as the easing of travel restrictions supported the revenue growth.

“While Omicron caused a temporary setback in global demand recovery in January, especially for business transient and group travel, new bookings across customer segments have rebounded to pre-Omicron levels. We are optimistic that the global recovery will progress meaningfully throughout 2022,” said Anthony Capuano, Chief Executive Officer.

For this year, Capuano expects gross rooms growth approaching 5% and deletions of 1 to 1.5%, resulting in anticipated net rooms growth of 3.5 to 4%. Marriott anticipates that full-year 2022 investment spending will total $600 million to $700 million.

Marriott stock rose 2.78% to 176.10 in pre-market trading on Tuesday. The stock rose nearly 5% so far this year after surging over 25% in 2021.

Analyst Comments

“The stronger-than-expected results should be a positive surprise for the stock, which continues to support our bullish view and Street-high target. In particular, the better-than-expected NUG and forward guide thereon are both supportive of the shares continuing to progress higher,” noted David Katz, Equity Analyst at Jefferies.

“Finally, although Mgt has not yet guided toward capital allocation, the strong quarter supports our forecasted capital returns by 2H22.”

Marriott Stock Price Forecast

Eight analysts who offered stock ratings for Marriott in the last three months forecast the average price in 12 months of $169.13 with a high forecast of $192.00 and a low forecast of $150.00.

The average price target represents a -1.28% change from the last price of $171.33. Of those eight analysts, three rated “Buy”, five rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $158 with a high of $226 under a bull scenario and $115 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the lodging company’s stock.

“We expect US industry RevPAR to take ~4 years to recover back to 2019 levels post COVID given our corporate travel surveys suggest structural headwinds. Largest hotel brand company globally creates economies of scale, but also law of large numbers has led to lower unit growth than peers,” noted Thomas Allen, equity analyst at Morgan Stanley.

“With the stock trading above its historical avg multiple, we see too wide a risk-reward to justify recommending, with upside/downside driven by how strong and quickly business trends return to normal post-COVID-19.”

Several analysts have also updated their stock outlook. Berenberg raised the target price to $165 from $130. BofA Global Research lifted the price objective to $190 from $180. Cowen and company upped the target price to $180 from $170.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator shows a strong buying opportunity.

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