Raymond James: Pullback In Marriott Shares Creates Entry Point In 'Global Brand Powerhouse'

Despite Marriott International Inc MAR’s recent pullback, Raymond James considers the company “bruised, not broken.”

The Analysts

Raymond James analyst William Crow upgraded Marriott from Market Perform to Outperform and set a $140 price target.

The Thesis

The 7-percent pullback in Marriott shares gives investors an appealing entry point, Crow said in the Tuesday upgrade note. (See the analyst's track record here.) 

This event left shares 19 percent below their 52-week-high.

Despite the negative investor reaction, Crow said he remains bullish on the stock.

Marriott is a "global brand powerhouse" with 30-plus brands, 1.3 million open rooms, excellent management and an "industry-leading" development pipeline of 466,000 rooms, the analyst said. The hospitality company is a "free cash flow-generating machine with a ferocious appetite for capital returns to shareholders" that will deliver low-to-mid-teens EPS growth for the next several years, he said. 

Some of the highlights that Crow noted from Marriott's second-quarter earnings call were as follows: 

• Management announced a sliding scale reimbursement system for hotels with loyalty programs. This will likely reduce the incentive to cut room prices to reach occupancy.
• Group pace is up by low single digits versus competitors. 

Price Action

Marriott shares were up 1.25 percent at $121.96 at the time of publication Tuesday.

Related Links:

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Photo courtesy of Marriott.