Bluegreen Vacations Interrupted By New Sell-Side Bear

Bluegreen Vacations Corp BXG reported second-quarter earnings Aug. 2 that fell short of analyst expectations.

The Analyst

Bank Of America Merrill Lynch's Shaun Kelley downgraded Bluegreen Vacations from Buy to Underperform and decreased the price target from $26 to $19.

The Thesis

The timeshare company reported slower-than-expected sales growth and corporate expenses that were above expectations for the second consecutive quarter, Kelley said in the Friday downgrade note. (See the analyst's track record here.) 

Total Q2 revenue of $195 million was beneath Kelley's forecast of $208 million. Bluegreen reported 8-percent lower tours, while vacation ownership interest sales were up only 3.4 percent year-over-year when the analyst was expecting a 10.4-percent increase.

EBITDA of $42 million was lower than the $45 million BofA expected. Kelley lowered the 2019 EBITDA forecast by 4 percent on projections of slower growth. 

Bluegreen's initiatives are taking longer than initially thought, and with more disruptions, the analyst said. The timeshare company has short-term execution risks and a lack of catalysts, he said. 

BofA's new price target is 7 times 2019 EBITDA, which is in-line with peers.

The Price Action

Bluegreen Vacations shares were down 4.57 percent at $19.65 at the time of publication Friday. 

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