Goldman Sees 15% Upside At Vail Resorts

• Goldman Sachs analysts Afua Ahwoi, Steven Kent and Lara Fourman raised their rating on shares of Vail Resorts, Inc. MTN from Neutral to Buy.
• They also boosted their price target from $108 to $144. The new target implies an upside potential of roughly 15 percent.
• The experts anticipate Vail, a key player in the US leisure travel industry, is one of the main beneficiaries of what they expect to be “solid leisure travel trends in 2016.”

In a report issued Monday, analysts at Goldman Sachs upgraded shares of Vail Resorts from Neutral to Buy, while raising their price target from $108 to $144 on the expectation that Vail benefits largely from what they anticipate will be robust leisure travel trends next year. According to a survey conducted by the firm, consumers’ “appetite for travel/entertainment has improved sequentially at the high end.” Also, the appetite for travel and entertainment is higher than the general appetite to spend.

In addition, the experts believe “investors are underestimating the rebound potential of Vail’s Tahoe resorts following two weak ski seasons.” Apparently, the stage is now set for strong snow conditions; thus, Goldman decided to increase its skier visit forecasts – and consequently, its EBITDA estimates above consensus.

Finally, the report noted, Vail’s free cash flow is surging (and should continue to do so, driven by higher profitability and lower capex), providing the company with capital allocation optionality – to raise dividends, repurchase stock, etc.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.