Marriott Bookings Near Pre-Pandemic Levels

Marriott International Inc. (MAR) is trading higher by 2% in Wednesday’s pre-market after beating Q1 2022 profit estimates by a wide margin and reinstating its dividend after suspending the payout in February 2020. The company reported earnings of $1.25 per-share, $0.33 higher than expectations, while revenue rose a healthy 81.3% year-over-year to $4.2 billion, just below consensus. Occupancy rose from 45% in January to 64% in March, less than 10% below pre-pandemic levels.

Business Travel Returning to Normal

The lodging giant reported the largest surge in global demand since the start of the pandemic, with massive immunity generated by vaccines and natural infection dropping hospitalization rates. The end of most government mandates has encouraged businesses to reinstate physical travel, finally walking away from the virtual meeting place, hopefully for the last time. Even so, travel costs are soaring due to rising fuel prices, causing some companies to retain cheaper alternatives.

Marriott also reported a strong quarter in February but Omicron kept many investors on the sidelines. The company is faring better than many rivals, with Hilton Worldwide Holdings Inc. (HLT) missing revenue estimates and issuing downside guidance on Tuesday. That stock is now trading at a three-week low after posting an all-time high in April. Technically speaking, Hyatt Hotels Inc. (H) is the weakness of the three majors, still oscillating near February 2020 resistance ahead of May 10th earnings.

Wall Street and Technical Outlook

Wall Street consensus stands at a mediocre ‘Hold’ rating based upon 7 ‘Buy’, 1 ‘Overweight’, 14 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $164 to a Street-high $210 while the stock is set to open Wednesday’s session about $3 below the median $179 target. This modest placement bodes well for an uptick reaching the all-time high at 196, posted just two weeks ago.

Marriott topped out near 150 in 2018 when President Trump started the trade war with China. It tested that price level in February 2020 and sold off to a 6-year low during March’s pandemic decline. The subsequent rally reached resistance in March 2021, ahead of a September breakout that eased into a rising channel pattern. That bullish formation is still in place, suggesting the stock is engaged in a long-term uptrend that reaches 200 as the next short-term target.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Hilton Stock Hits Record High After Q4 Revenue Beat; Target Price $178 in Best Case

Hilton, one of the largest and fastest-growing hospitality companies in the world, reported better-than-expected revenue in the fourth quarter, largely driven by higher vaccination rates and the relaxation of travel restrictions during the holiday season.

The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, said its net income attributable to shareholders of $147 million, or $0.52 per share. That swung from a net loss of $224 million, or $0.81 per share seen a year ago.

The McLean, Virginia-based reported quarterly adjusted earnings of $0.72 per share, missing the Wall Street consensus estimates of $0.74 per share. However, the company’s revenue more than doubled to $1.84 billion from a year earlier. That topped the market expectations of $1.82 billion.

The increase in travel during the holiday quarter as well as the easing of travel restrictions supported the revenue growth.

Hilton Worldwide stock hit an all-time high of $159. 98, rising nearly 1% on Wednesday. The stock rose nearly 1% so far this year after surging over 40 in 2021.

Analyst Comments

“The bottom-line beat comprised of mixed line-item results should draw a neutral reaction in the shares, pending Mgt. commentary on the call. The impacts to results appear largely COVID-driven rather than fundamental and should dissipate through 1H22, although the performance margin for higher-valuation stocks is narrower, in our view. Taken in total, the COVID recovery is well underway and HLT is firmly positioned within it,” noted David Katz, Equity Analyst at Jefferies.

Hilton Stock Price Forecast

Twelve analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $149.64 with a high forecast of $178.00 and a low forecast of $126.00.

The average price target represents a -5.99% change from the last price of $159.18. Of those 12 analysts, three rated “Buy”, nine rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $135 with a high of $189 under a bull scenario and $96 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the hospitality company’s stock.

“We expect US industry RevPAR to take ~4 years to recover back to 2019 levels post COVID given our corporate travel surveys suggest structural headwinds. Strong mgmt team with a track record of creating value for owners,” noted Thomas Allen, equity analyst at Morgan Stanley.

“Attractive 2022e/2023e 5.0/5.5% net unit growth creates more predictable growth than more asset-heavy peers. However, the risk to 2022 EBITDA expectations given owned hotels is mostly internationally-based where the Covid recovery is lagging. We see a wide risk-reward that will depend on the strength of recovery from COVID-19.”

Several analysts have also updated their stock outlook. Wells Fargo cut the target price to $147 from $150. Berenberg raised the price objective to $140 from $110. Evercore ISI lifted the price target to $22 from $21.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator shows a strong buying opportunity.

Check out FX Empire’s earnings calendar

Why Marriott Stock Is Up By 4% Today

Marriott Shares Gain Ground As Traders Rush To Buy Hotel Stocks After Recent Panic

Shares of Marriott International gained strong upside momentum today as traders rushed to buy them after Friday’s pullback, which was caused by fears over the new variant of coronavirus.

Other hotel stocks like Hyatt Hotels Corporation or Hilton Worldwide Holdings are also moving higher today, and it looks that traders bet that Friday’s panic was not justified.

Currently, analysts expect that Marriott will report earnings of $2.92 per share in the current year. The company’s profits are expected to jump to $5.36 per share in the next year as the travel sector rebounds from the blow dealt by the pandemic, so the stock is trading at 28 forward P/E, which looks rather expensive even in the current market environment.

What’s Next For Marriott Stock?

Marriott stock will likely remain volatile in the upcoming trading sessions as traders evaluate the risks posed by the new variant of coronavirus.

Before the news on Omicron broke, the stock was trying to gain upside momentum after the pullback from yearly highs. Problems with coronavirus in Europe have already put some pressure on Marriott shares, but it should be noted that the market was willing to focus on the company’s future and ignore high valuation levels.

In case Omicron turns out to be a real threat and countries introduce additional virus containment measures, analysts will have to adjust their forecasts for 2022, which will hurt Marriott stock.

At current valuation levels, Marriott stock price dynamics are mostly dependent on market’s view on the trajectory of the hotel demand rebound. If recovery is postponed due to the spread of the new variant of coronavirus, there is a risk of multiple compression, which will hurt the price of the stock. However, if research shows that current vaccines work well against Omicron, Marriott and other hotel stocks may quickly get back to their previous levels.

For a look at all of today’s economic events, check out our economic calendar.

How Supply Issues could Influence SP500?

At the same time, many businesses continue to announce plans for further price increases, with most facing higher cost pressures. It will be interesting to see how or when the U.S. consumer starts to pull back.

Upcoming price increases

UPS yesterday was the latest to announce upcoming price increases, joining companies like Kimberley-Clark, Procter & Gamble, Nestlé, and Chipotle, to name just a few that are attempting to offset higher input costs. These moves reinforce the bears argument that inflation will prove to be longer-lasting than the Federal Reserve’s stance that the wave of higher prices is only “transitory.”

Judging from regional Federal Reserve Manufacturing Surveys that have been updated so far, challenges related to supply chain dislocations and labor shortages continue to contribute to the inflationary environment. Meaning manufactures are still struggling to expand output amid raw material shortages, higher input costs, transportation bottlenecks, and a lack of qualified workers. There have been minor improvements with the pace of cost increases easing a bit and respondent outlooks turning more positive.

It will take more than one month of slightly better data for investors to believe the worst of the supply chain mess is behind us, though.

Data to watch today

Economic data today includes advanced reads on Retail and Wholesale Inventories for October. Bulls are hoping inventories have managed to climb from depressed levels brought on by supply chain challenges, especially as we head into the holiday shopping season. Remember, if companies don’t have the products to sell it will be tough to meet earnings and growth forecasts.

Durable Goods Orders for September is also due today. Oil traders today are anxious to see the Energy Information Administration’s weekly oil inventory report after both Brent and WTI oil futures yesterday closed at their highest levels since 2014 when oil was trading close to $100 a barrel.

Investors this morning will also be digesting the Bank of Canada’s latest policy decision. Insiders are expecting the central bank to raise its inflation forecast and further cut its bond purchases. Another reduction will mark the fourth time in the past year that the Bank of Canada has “tapered” its asset purchases, something most other central banks have not yet begun. The Bank of Canada could also announce when it intends to begin interest rate hikes, with some analysts anticipating liftoff as soon as March due to rising inflation.

Such a move could increase fears that other global central banks, including the U.S. Fed, will feel pressured to act more aggressively to combat inflation. Meaning analysts could begin moving up timelines for when the Fed might end asset purchases and begin rate hikes, something that could weigh on bullish outlooks.

Earnings

It’s another busy day for earnings with highlights including BASF, Boeing, Bristol Myers Squibb, CME Group, Coca Cola, eBay, General Motors, Hilton Worldwide, Kraft Heinz, McDonald’s, Norfolk Southern, O’Reilly Automotive, Thermo Fisher, and Twilio. Alphabet (Google) and Microsoft announced after the market close yesterday with both blowing expectations out of the water.

Notably, Google’s advertising revenue, which rose +43%, didn’t appear to take any hits from changes made to Apple’s privacy policies, something cited by both Facebook and Snap. Both Google and Microsoft also saw continued robust growth in their cloud divisions with revenue climbing +45% and +31% respectively. Apple and Amazon will wrap up the the last of the so-called FAAMG stock earnings when they report tomorrow. Stay tuned…

Big Tech Pushing S&P 500… But How Does it End? Amazon, Apple, Facebook, Google, Microsoft and Tesla now make up 24% of the S&P 500. It seems like how they go so goes the overall stock market. Keep in mind, “Big Tech” now makes up about 40% of the entire S&P 500. If the trade finds Big Tech to be overvalued or in some type of bubble the market could take a sizable hit as it deflates.

Marriott Looks Overvalued Ahead of Monday Report

Marriott International Inc. (MAR) reports Q1 2021 earnings ahead of Monday’s opening bell, with analysts looking for a profit of just $0.04 per-share on $2.41 billion in revenue. If met, earnings-per-share (EPS) will mark less than one-tenth of the profit posted in the same quarter last year. The stock gained ground despite reporting a 59.6% Q4 2020 revenue decline in February but topped out a week later and has been rangebound since that time.

Empty Hotel Rooms

Rivals Hyatt Hotels Corp. (H) and Hilton Worldwide Holdings Inc. (HLT) missed Q1 estimates by wide margins last week, prompting selloffs throughout the lodging sector. Both companies posted revenue declines in excess of 50%, raising doubts about the much-heralded ‘return to normalcy’ following broad-based US vaccination efforts. The dismal results add to growing pessimism that Marriott will need to overcome this week to attract buying interest.

Marriott and rivals are dependent on international business travel, which will recover at a slower pace than recreational travel due to sluggish vaccine uptake in Europe and parts of Asia. In addition, the virtual meeting space is here to stay, likely to dampen revenues long after the pandemic runs its course. Sector stocks look highly overvalued given those bearish catalysts, trading near all-time highs thanks to the ultra-hot US equity markets.

Wall Street and Technical Outlook

Wall Street consensus now stands at a ‘Moderate Buy’, based upon 3 ‘Buy’ and 8 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $116 to a Street-high $168 while the stock closed Friday’s session about $8 above the median $138 target.  Upside appears limited due to this elevated placement, at least until warm bodies fill hotel rooms at a greater pace.

Marriott broke out above 2018 resistance at 149 in December 2019 and failed the breakout during 2020’s pandemic decline. A multiwave uptick reached the prior high in February 2021, yielding a breakout that also failed. Price action since that time has carved a descending triangle with horizontal support near 139 while accumulation has eased into a neutral holding pattern. Bears hold a modest edge in this set-up but earnings is likely to generate more smoke than fire.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

U.S. Hotel Operator Hilton’s Shares Slump as Q1 Earnings Disappoint

Hilton Worldwide Holdings, one of the largest and fastest-growing hospitality companies in the world, reported lower-than-expected earnings in the first quarter of 2021 as a resurgence in COVID-19 cases and tightening travel restrictions hurt bookings, sending its shares down about 4% on Wednesday.

The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, reported earnings per share, on an adjusted basis, of $0.02, missing the Wall Street’s consensus estimates of $0.05 per share.

Hilton said its net loss was $109 million for the first quarter and adjusted EBITDA was $198 million for the first quarter. System-wide comparable RevPAR fell 38.4% on a currency-neutral basis for the first quarter from the same period in 2020.

Following the disappointing results, Hilton shares fell about 4% to $124.54 on Wednesday. The stock rose over 12% so far this year.

Hilton Stock Price Forecast

Eight analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $120.75 with a high forecast of $145.00 and a low forecast of $104.00.

The average price target represents a -3.18% decrease from the last price of $124.71. Of those eight analysts, three rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $101 with a high of $141 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weight” rating on the hospitality company’s stock.

Several other analysts have also updated their stock outlook. Hilton Worldwide had its price objective hoisted by Truist Securities to $114 from $106. Truist Securities currently has a hold rating on the stock. Raymond James raised their target price to $125 from $105 and gave the stock an outperform rating. Gordon Haskett upped their price target to $114 from $97 and gave the company a hold rating.

Analyst Comments

“The spread of coronavirus will pressure RevPAR growth, unit growth, and non-room fee growth. Strong mgmt team with a track record of creating value for owners. We see a wide risk-reward that will depend on the severity and speed of recovery from COVID-19,” noted Thomas Allen, equity analyst at Morgan Stanley.

“We think HLT is well placed from a liquidity standpoint, but its ability to repurchase stock medium-term may be impaired.”

Check out FX Empire’s earnings calendar

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Hotel Operator Hilton Posts Surprise Q4 Loss, Shares Fall

Hilton Worldwide Holdings, one of the largest and fastest-growing hospitality companies in the world, reported a loss for the third consecutive time during the December quarter as a fresh spike in COVID-19 cases and tightening travel restrictions hurt bookings, sending its shares down over 2% in pre-market trading on Wednesday.

The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, reported a net loss of $225 million for the fourth quarter and $720 million for the full year. Adjusted EBITDA was $204 million for the fourth quarter and $842 million for the full year.

Hilton said its system-wide comparable RevPAR slumped 59.2% and 56.7% on a currency-neutral basis for the fourth quarter and full year, respectively, from the same periods a year ago.

The hotel company said its revenue slumped more than 60% to $890 million, well below the Wall Street consensus estimates of $1.03 billion.  Adjusted for special items, the company reported earnings per share of -$0.10 per share, well below the market expectations for a profit of $0.03 per share.

“We expect shares to react modestly lower on the lower than expected results, ahead of management’s commentary on the call later this morning. Within the results, we focus on the commentary for the continued generation of mid-single-digit system growth in 2021, which is a primary driver of long-term earnings and margin expansion as well as the valuation,” said David Katz, equity analyst at Jefferies.

“Our confidence remains high in recovery, the trajectory of which is still taking shape.”

Following this disappointing result, Hilton Worldwide Holdings‘ shares, which has risen over 2% so far this year, fell 2.3% to $111 in pre-market trading on Wednesday.

Hilton Stock Price Forecast

Six analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $112.00 with a high forecast of $130.00 and a low forecast of $85.00.

The average price target represents a -1.42% decrease from the last price of $113.61. From those six analysts, three rated “Buy”, three rated “Hold”, none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $101 with a high of $141 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the hospitality company’s stock.

Several other analysts have also updated their stock outlook. BMO raised the target price to $110 from $92. UBS upped the target price to $124 from $114. Berenberg increased the target price to $100 from $77. Baird raises target price to $106 from $105. BMO Capital Markets raised their target price to $92 from $89 and gave the stock a “market perform” rating.

Moreover, Gordon Haskett raised their target price to $114 from $97 and gave the stock a “hold” rating. Wells Fargo & Company raised their target price to $105 from $95 and gave the stock an “equal weight” rating. Argus raised shares to a “buy” rating from a “hold” and set a $120 price target.

Analyst Comments

“The spread of coronavirus will pressure RevPAR growth, unit growth, and non-room fee growth. Strong management team with a track record of creating value for owners. We see a wide risk-reward that will depend on the severity and speed of recovery from COVID-19,” said Thomas Allen, equity analyst at Morgan Stanley.

“We think HLT is well placed from a liquidity standpoint, but its ability to repurchase stock medium- term may be impaired.”

Check out FX Empire’s earnings calendar