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Marriott Stock Falls on Downgrade by Evercore to In-Line

While the hotel industry is recovering better than many analysts anticipated, Marriott’s stock already accounts for that, Evercore said.
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Marriott International  (MAR) - Get Marriott International, Inc. (MAR) Report shares fell Tuesday, after Evercore ISI downgraded the giant hotel chain to in-line from outperform on valuation considerations.

To be sure, Evercore analyst Rich Hightower raised his share-price target to $160 from $145 to account for recent market activity.

The stock on Tuesday closed at $155.02, down 2.6%. It has jumped 16% in the past three months amid anticipation of increased travel.

While the hotel industry is recovering better than many analysts anticipated, Marriott’s stock already accounts for that, leaving little room for the stock to rise further, Hightower wrote in a commentary cited by CNBC. 

“The shift to [in-line] is simply a valuation call,” he wrote.

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Still, Hightower raised his earnings estimates for the hotel industry as a whole for the second half of the year. That reflects “better-than-expected fundamental performance through September, “ he said.

Morningstar analyst Dan Wasiolek puts fair value at $130 for Marriott.

“Narrow-moat Marriott’s second-quarter global revenue per available room improved to 56% of 2019 levels (versus 62% for Hilton), up from 42% in the first quarter (45%),” he wrote in August.

“We were encouraged to hear that U.S. group bookings for all future dates returned to 71% of pre-pandemic marks in June, up sharply from 44% in March, with rates having largely fully recovered.

“As a result, we plan to maintain our 2021 RevPAR forecast of low 60s of 2019 levels, with a full recovery by 2023. We don’t plan a material change to our $130 fair value estimate, leaving the shares slightly overvalued.”