Marriott's Growth Strategy: Morgan Stanley Foresees Upside Amid Recent Market Jitters

Morgan Stanley analyst Stephen W Grambling has reiterated an Overweight rating on the shares of Marriott International Inc MAR with a price target of $225.

MAR is set to host its first investor day in over four years on September 27 in Miami. During prior analyst days, the event focused on setting 3-year targets, reviewing marketing/loyalty programs, and detailing future room growth, said the analyst.

The analyst anticipates a similar structure, with added details on recent brand launches & partnerships, technology investments, and non-RevPAR related fees.

Based on the analyst's 2023 estimate , MAR will deliver an 11% 2019-2023 EPS CAGR on +2% RevPAR and +7% EBITDA, which is in-line with the algorithm despite facing a pandemic that drove unprecedented declines in RevPAR.

The company reaffirmed its confidence in returning back to mid-single-digit net rooms growth during 2Q earnings, so the analyst will look to hear more details on the building blocks across geographies, chain scales, and types of fees.

The analyst will want to know more about how MAR is sizing the opportunity for growth along with the progress of Project Midx Studios.

Revamping of technology and the growth prospects for non-RevPAR related areas will also be topics of interest, according to the analyst.

The analyst will expect an update on the intended amount of capital returns and the levers that will be used for distribution. 

The recent sell-off leaves MAR trading at 19x the analyst's 2024 EPS, below the long-term average of ~21.5X, which reflects macro fears.

The analyst views MAR's high visibility and scale setting the company to deliver continued mid-teens EPS growth with downside protection given a more asset light model.

Price Action: MAR shares are trading lower by 0.98% at $191.05 on the last check Tuesday.