Marriott's Share Repurchases May Not Commence Until 2017

Analyst Felicia Hendrix noted that the company announced anti-trust approval in China for its impending deal to buy Starwood.

Updating Estimates

Barclays updated its estimates for Marriott based on the deal and the guidance issued by the two companies separately in late July. While noting that both companies lowered their 2016 guidance, citing reduced RevPAR outlook, Barclays said it is raising its 2016 EBITDA to $2.168 million from $1.936 million but lowered its earnings per share estimate to $3.65 from $3.71. The guidance, according to the firm, accounts for the inclusion of Starwood's legacy business in the fourth quarter.

The firm raised its 2017 EBITDA estimate to $3.35 million from $2.087 million, reflecting $1.1 billion of Starwood EBITDA and $175 million in SG&A cost savings in year one, and earnings per share estimate to $4.50 from $4.35. However, the firm sees upside, as its estimates do not include revenue synergies.

Price Action

Barclays raised its price target for the shares of the company to $80 from $76, given the $8 positive impact from the deal and multiple expansion. However, the firm stays at Equal Weight, given the near-term risks, including decelerating industry trends and the potential for a longer-than-expected integration.

That said, Barclays sees Marriott as one of the more compelling multi-year stories in its lodging coverage universe due to cost and revenue synergies and operational improvement opportunities with Starwood.

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