Marriott Vacations (NYSE:VAC) is entering “the beginning of a transition period” following weaker-than-expected third quarter results and a leadership shake-up, analysts at Jefferies believe.
Jefferies maintained a ‘Hold’ rating and cut its price target to $52 from $76 post-earnings.
While the analysts see “considerable potential value in the company’s brands and assets,” it cautioned that “underwriting earnings power is presently highly challenged.”
Q3 revenue came in at $1.26 billion, missing Jefferies’ $1.32 billion estimate and the Street’s $1.31 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $170 million also fell short of expectations.
Marriott Vacations lowered its full-year adjusted EBITDA outlook to $740 million to $755 million from $750 million to $780 million previously, though adjusted EPS guidance was slightly raised to $6.70 to $7.10.
The analysts noted that earlier guidance in February 2023 had called for $950 million $1 billion in EBITDA, highlighting that “earnings expectations have declined.”
Jefferies also noted the company’s leadership change, with Marriott appointing Matt Avril as interim President and CEO following his role as an independent director since March. Avril previously led Diamond Resorts and held management roles at Vistana and Starwood Hotels. Longtime executive Brian Miller will retire as President of Vacation Ownership after 30 years.
“From this perspective, we believe strategic and earnings visibility is limited,” Jefferies wrote.
The firm revised its financial forecasts, now expecting 2025 revenue of $5.03 billion and adjusted EBITDA of $742 million, both down from prior estimates. For 2026, Jefferies projects $5.13 billion in revenue and $736 million in adjusted EBITDA.
Jefferies also trimmed valuation multiples, lowering its financial year 2026 enterprise value (EV)/EBITDA to 5.5x from 6.5x.
“We are not inclined to argue for upside in the shares given the recent performance and uncertainty in leadership,” the analysts concluded.