Bank of America (BoA) analysts have lowered their rating on Marriott Vacations to ‘Underperform’ after the timeshare ownership company’s third quarter results disappointed.
They also lowered their price target on the stock to US$65 from US$125.
Earlier this month, Marriott Vacations reported earnings per share (EPS) of $1.20 on revenue of $1.2 billion, missing Wall Street estimates of EPS of $2.19 on revenue of $1.19 billion.
The company’s shares traded 1.3% lower at US$80.40 on Friday afternoon and are down about 40% in the year to date.
The BoA analysts highlighted in a note to clients that Marriott Vacations, a former division of Marriott International (NYSE:MAR), was facing pressure across every business segment.
Specifically, it cut core vacation ownership excluding Maui when it was already struggling to drive tour flow, called out credit delinquencies and looks under-reserved versus peers which weighs on margins, they noted.
Its rentals also face higher costs from double-digit homeowners association (HOA) fee increases amid higher costs and structural headwinds.
Financing also has a lower spread due to higher rates, the analysts added.
“We see these issues continuing into 2024 and move our estimates 10% below the Street for 2024/2024 while lowering our price objective and rating to US$65, US$125 prior, and ‘Underperform,’ ‘Neutral’ prior, respectively,” they wrote.
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