Marriott International Has Comfortable Quarter
If you’ve been wondering what’s been driving shares of Marriott International (NASDAQ: MAR) higher the last two years it’s not the outlook for reopening. More likely, it’s the institutional buying because it has been strong. The institutions have purchased $1.27 billion worth of shares, net of selling, which is good for 2.3% of the market cap with the stock trading at a new all-time high. The buying has total ownership up to 59% and growing because so far, in 2022, institutional activity has been very bullish indeed. The institutions, in the first 6 weeks of the year, have purchased $0.47 billion worth of the stock or about 0.85% of the company and they are still buying because the outlook for the reopening is still so strong.
The analysts, on the other hand, have been less enthusiastic about the stock but that is an opportunity in and of itself. The 10 analysts left covering the stock, down from 20 just 1 year ago, rate the stock only at Hold with a price target about 10% below the current price action. Because the chatter following the Q3 report included upgrades and price target increases, we are expecting to see the same again now the Q4 results are in the bag. In our view, the high price target is about to fall as well because this market is moving higher and has its sights set on $186 or higher.
Marriott Has Strong Quarter, Provides Optimistic Outlook
Marriott International had a strong quarter despite the rise of Omicron and the company says demand has returned to pre-Omicron levels already. This led to revenue of $4.4 billion which is still down about 20% from two years ago but 105% better than last year and 1100 basis points better than expected. The strength was driven by high double and triple-digit increases in RevPAR with North America up 124.5%, International up 83%, and global up 124.5%. The company also reported an increase in margin due to the revenue leverage and well above what the analysts were looking for. The GAAP $1.30 not only grew $1.18 versus last year but it beat the consensus by $0.30 or 3000 basis points.
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"While Omicron caused a temporary setback in global demand recovery in January, especially for business transient and group travel, new bookings across customer segments have rebounded to pre-Omicron levels. We are optimistic that the global recovery will progress meaningfully throughout 2022,” said CEO
Marriott did not give any guidance for the coming year but, based on the quarterly strength and plans to add 485,000 rooms to its empire over the next several years. That figure includes 202,000 rooms already under construction so we are expecting to see a positive influence on results by the end of the year.
The Technical Outlook: Marriott Breaks Out To New High
Shares of Marriott were moving to new highs days before the earnings were released and are moving higher again now. The chart pattern is distinctly bullish showing a sharp rally followed by consolidation and then new highs. In our opinion, this market will move up to at least the $186 level if not higher and we are leaning toward the higher end of the range. The only risk is if another COVID variant raises its head to scare travelers, or if the institutions start to sell.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Marriott International (MAR) | $283.96 | +1.8% | 0.89% | 29.70 | Hold | $266.25 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
