Raymond James Upgrades Marriott on "Simple, but Powerful Strategy"

In a report published Monday, Raymond James analyst William Crow upgraded

from Market Perform to Outperform and announced a $60.00 price target following the company's release of fourth quarter and full year 2013 results on February 19. On Wednesday, Marriott reported Q4 EPS of $0.49 versus the estimated $0.50. EPS and sales were down 13% and 14%, respectively, from the same quarter last year. Revenue came in at $3.22B versus the estimated $3.31B. Management is looking for first quarter and FY2014 EPS to be within $0.47-$0.52 and $2.29-$2.45, respectively. Crow noted the company's "simple, but powerful, strategy" of delivering solid earnings growth. The analyst commented on the company's approximate 5% room count growth per year and the return of $1 billion per year to shareholders. Raymond James added, "Momentum within Marriott seems to be building as of late, with a sizeable jump in the development pipeline (35% sequential increase in room count), accelerating capital distributions to shareholders ($1.25-1.5 billion target in 2014), an improved outlook in several global markets, slowing G&A expense growth, and growing free cash flow. […] The bottom line is that we believe Marriott can outperform the broader market (though likely lag more asset-laden peers) in a more bullish economic growth environment and hold its own (and likely outperform the asset-laden peers) in a more modest economic growth environment." The analyst raised 2014 and 2015 EPS estimates to $2.42 and $2.86, up $0.03 and $0.10, respectively. Raymond James also increased EBITDA estimates for 2014 and 2015 from $1.334 to $1.365 billion, and from $1.489 to $1.517 billion. Shares of Marriott closed at $53.47 on Monday, up 1.83% for the day.