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JMP Securities sees 17.6% upside in Marriott Vacations stock By Investing.com

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On Tuesday, JMP Securities initiated coverage on shares of Marriott Vacations Worldwide (NYSE:VAC), assigning a Market Outperform rating and setting a price target of $105.00. The new target suggests a significant potential upside from the current trading price of $89.23. The analyst at JMP Securities based the price target on 6.3 times the firm’s 2025 EBITDA estimate and 11.1 times the projected 2025 earnings per share.

The analyst highlighted that the potential price upside, combined with a 3.2% yield, could lead to an overall potential return of 20.9%. This assessment is grounded in Marriott Vacations’ current market performance and future financial projections. The target multiple is notably lower than the five-year average for both Marriott Vacations and the Timeshare industry, which stand at 10.0 times and 8.2 times, respectively.

Marriott Vacations Worldwide is in the business of timeshare vacation ownership resorts with a variety of brands under its umbrella. The company’s stock has been analyzed in the context of its industry performance and historical valuation metrics. The Market Outperform rating indicates the analyst’s expectation that the stock will perform better than the average return of the stocks covered by JMP Securities within the same industry over the next 12 to 18 months.

InvestingPro Insights

As Marriott Vacations Worldwide (NYSE:VAC) garners attention with a new Market Outperform rating from JMP Securities, a closer look at the company’s financial health and market performance through InvestingPro data and tips may provide a more nuanced understanding for investors.

The company’s aggressive share buyback strategy, as noted by an InvestingPro Tip, signals management’s confidence in the company’s value, potentially underpinning the stock’s future performance. This is backed by a InvestingPro Tip that the company has consistently raised its dividend for 3 consecutive years, with a current dividend yield of 3.41%, which could appeal to income-focused investors.

From a valuation standpoint, Marriott Vacations’ adjusted P/E ratio over the last twelve months as of Q3 2023 stands at a modest 9.04, below the industry average, which may suggest a value opportunity. Moreover, the company’s price/book ratio during the same period is 1.32, reinforcing the notion of a potentially undervalued stock.

Despite the company’s revenue seeing a slight decline of 1.66% over the last twelve months as of Q3 2023, the gross profit…

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