Jefferies Remains Bullish on Marriott International (MAR) as Timeshare Spin Continues on Track
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Price: $356.72 +1.19%
Rating Summary:
19 Buy, 18 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
19 Buy, 18 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Jefferies is maintaining its Buy rating and $35 price target on shares of Marriott International (NYSE: MAR) while noting the timeshare spineoff continue to look like a positive catalyst for the company.
VAC highlighted that the timeshare spinoff is on track for regular trading to begin on November 22 as MAR shareholders are expected to receive one share of VAC for every ten shares of MAR.
VAC management offered a 2012 outlook which entails a 5 percent increase in contract sales, $127 million in adjusted EBITDA. Long-term the company is looking to cut its market and sales expenses from 50 percent of its total sales to 42-46 percent. The firm notes that its planed to be achieved by operating leverage and the sell out of luxury inventory. Margins for 2011 are forecasted to 9-13 percent as long-term goals point to margins of 20 percent.
An analyst at Jefferies comments, "We highlight that investors have typically ascribed a lower multiple to timeshare compared with fee based lodging given the relative capital intensity, somewhat opaque accounting and the general perception of a lower quality business....We believe VAC shares could see initial selling pressure as some MAR investors will potentially unwind their VAC stock. In terms of MAR's valuation, we believe the multiple could expand over time as MAR becomes a pure fee based business with minimal capital requirements and thus we remain positive on MAR shares."
For more ratings news on Marriott International click here and for the rating history of Marriott International click here.
Shares of Marriott International closed at $32.78 yesterday.
VAC highlighted that the timeshare spinoff is on track for regular trading to begin on November 22 as MAR shareholders are expected to receive one share of VAC for every ten shares of MAR.
VAC management offered a 2012 outlook which entails a 5 percent increase in contract sales, $127 million in adjusted EBITDA. Long-term the company is looking to cut its market and sales expenses from 50 percent of its total sales to 42-46 percent. The firm notes that its planed to be achieved by operating leverage and the sell out of luxury inventory. Margins for 2011 are forecasted to 9-13 percent as long-term goals point to margins of 20 percent.
An analyst at Jefferies comments, "We highlight that investors have typically ascribed a lower multiple to timeshare compared with fee based lodging given the relative capital intensity, somewhat opaque accounting and the general perception of a lower quality business....We believe VAC shares could see initial selling pressure as some MAR investors will potentially unwind their VAC stock. In terms of MAR's valuation, we believe the multiple could expand over time as MAR becomes a pure fee based business with minimal capital requirements and thus we remain positive on MAR shares."
For more ratings news on Marriott International click here and for the rating history of Marriott International click here.
Shares of Marriott International closed at $32.78 yesterday.
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