Credit Suisse Buying In On Marriott's Timeshare Business

As summer travelers begin breaking out the maps and weighing destinations, one analyst has a recommendation: Marriott Vacations Worldwide Corp (NYSE: VAC).

The Rating

Credit Suisse analysts Cameron McKnight and Ben Combes initiated coverage with an Outperform rating and a $146 price target.

The Thesis

Marriott is Credit Suisse’s top timeshare pick partly for its ILG Inc (NASDAQ: ILG) acquisition — a move that will establish the market’s largest upper-upscale timeshare firm.

“We see significant revenue and efficiency opportunities and a potential path to a $175 price in our Blue Sky scenario,” McKnight and Combes wrote in a Friday note.

The analysts expect improved marketing initiatives, a sales ramp for new projects and Marriott’s development pipeline to drive 25-percent bottom-line compound annual growth between 2019 and 2020.

“We like the improved industry structure, return profile, and strong growth prospects,” they wrote. “We expect sales to benefit from strong consumer confidence and the shift of consumer spend to travel and leisure.”

Price Action

Marriott shares popped marginally on the upgrade and traded around $118.62 at the time of publication.

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