Marriott Lifted to Overweight at Wells Fargo on Underperformance

Wells Fargo analyst Dori Kesten lifted her rating on Marriott to overweight, noting that the hotel chain's shares have underperformed those of rival Hilton this year.
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Marriott International  (MAR) - Get Report shares were higher after Wells Fargo analyst Dori Kesten upgraded the hospitality giant to overweight from equal weight.

Her reasoning? The shares have underperformed those of competitor Hilton Worldwide (HLT) - Get Report by about 10 percentage points this year, she wrote in a report, according to The Fly.

Marriott shares have dropped 50% in 2020 through late morning Tuesday, compared with a 39% decline for Hilton.

Both hotel titans, of course, have suffered from the coronavirus pandemic, which has kept many would-be travelers at home.

For Marriott to trade at a multiple comparable to that of Hilton, MAR could soar 20% over the next 12 months, Kesten said.

Still, Kesten lowered her share price target for Marriott to $85 from $113, reflecting its recent plunge.

On March 17, Marriott became one of the first major companies to report large-scale layoffs. 

It announced furloughs that could affect tens of thousands of workers. The company had 174,000 employees globally as of Dec. 31.

Morningstar analyst Dan Wasiolek has a bullish long-term view on Marriott.

“We expect Marriott to expand room and revenue share in the hotel industry over the next decade, driven by a favorable next-generation traveler position supported by renovated and newer brands, as well as its industry-leading loyalty program,” he wrote in a March 31 report.

Marriott’s "intangible brand asset and switching cost advantages are set to strengthen.”

He puts the fair value for Marriott’s shares at $120.

The stock recently traded at $76.88, up 8.9%, with the S&P 500 up 2.36%.