Mizuho's New Price Target#
Mizuho has increased its price target for Marriott International Inc. (NASDAQ:MAR) from $343 to $384. This new target suggests a potential increase of about 7% from the current stock price of $359. Notably, Marriott's stock has already risen by 42% over the past year.
Strong First-Quarter Performance#
The upgrade comes after Marriott reported strong first-quarter results, with earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeding expectations by $83 million. Despite challenges from the ongoing conflict in the Middle East, Marriott has raised its full-year EBITDA guidance by $40 million. The company currently trades at an EV/EBITDA multiple of 24.4 times, indicating a premium valuation compared to its peers.
Regional Challenges and Outlook#
The Middle East, which accounts for 3% of Marriott's open rooms and global gross fees, is expected to impact revenue per available room (RevPAR) by 100 to 125 basis points this year. In March, RevPAR in the Middle East fell by 30%, and the forecast for the second quarter anticipates a 50% decline. However, the outlook for the U.S. and Canada remains positive, with the upcoming World Cup expected to boost global RevPAR by 30 to 35 basis points.
Positive Trends in the U.S. Market#
Marriott's first-quarter earnings also surpassed analysts' expectations, with earnings per share reaching $2.72 compared to the forecast of $2.54. Revenue totaled $6.65 billion, exceeding the anticipated $6.56 billion. Additionally, U.S. hotel RevPAR increased by 3.2% year-over-year for the week ending May 2, driven by a rise in occupancy and average daily rates, particularly in luxury and upper midscale properties. This growth reflects strong investor confidence in Marriott's performance.