Friday - Mizuho has adjusted its outlook on Vail Resorts (NYSE:MTN), lowering the price target to $231 from $256, while still endorsing the stock with a Buy rating. The revision follows the company's third-quarter performance, which revealed ski visitation and EBITDA figures marginally surpassing Mizuho's forecasts. Nonetheless, Vail Resorts has revised its full-year EBITDA projection down to a range of $833 million to $851 million, slightly below Mizuho's initial estimate of $854 million.
The updated financial guidance accounts for an unforeseen $7 million impact from Australian operations in the fourth quarter, which was not anticipated in the previously reduced guidance. Additionally, season pass sales did not meet expectations, which has been attributed to the subpar snowfall in the prior season affecting the conversion of ticket holders to pass holders. This was further exacerbated by a segment of the customer base with lower commitment, who may be more sensitive to weather conditions, and the challenging comparisons due to the pandemic's impact on travel and leisure activities.
The report notes that the decrease in the price target to $231 reflects the revised earnings forecast and the identified challenges, particularly the lesser-than-anticipated season pass sales and the incremental headwinds faced in the Australian market. Despite these factors, Mizuho's continued Buy rating indicates a positive long-term outlook for Vail Resorts' stock.
Vail Resorts' financial adjustments and the updated analyst expectations come as the company navigates a complex operational landscape, with weather variability and the lingering effects of the COVID-19 pandemic influencing customer behavior and business performance. The company's stock price will continue to be monitored by investors as it strives to meet its adjusted EBITDA targets in the coming quarter.
In other recent news, Vail Resorts reported an increase in net income to $362 million in its third-quarter fiscal 2024 results, up from $325 million the previous year. However, the company also reported a 5% decrease in pass product sales for the upcoming 2024-2025 ski season. Stifel, Truist Securities, and JPMorgan (NYSE:JPM) have all adjusted their outlooks on Vail Resorts, with Stifel and Truist maintaining a Buy rating, while JPMorgan downgraded the stock rating from Neutral to Underweight.
Stifel revised its price target for Vail Resorts to $259 from the previous $262, while Truist Securities reduced its price target to $250 from the previous $265. JPMorgan, on the other hand, adjusted the price target to $176 from the previous $217. These adjustments are based on the company's recent earnings report and revised EBITDA estimates for fiscal years 2024 and 2025.
Vail Resorts also announced plans for significant capital investments, estimated to be between $219 million and $224 million for 2024. The company's CEO, Kirsten Lynch, reaffirmed Vail Resorts' growth strategy and competitive positioning, highlighting significant growth opportunities in Switzerland and Europe. However, she also noted that weather conditions and industry normalization are expected to be significant factors for visitation in 2025.
InvestingPro Insights
Investors considering Vail Resorts (NYSE:MTN) should note that the company has been showing signs of strong management confidence, with aggressive share buybacks and a history of consistent dividend payments over the last 14 years. These elements contribute to a high shareholder yield, reinforcing the long-term investment potential that Mizuho's Buy rating suggests. Additionally, Vail Resorts is trading at a significant discount, near its 52-week low, which could present a buying opportunity for value-seeking investors.
From a data perspective, Vail Resorts' market capitalization stands at $7.36 billion, with a P/E ratio of 31.14, which adjusts to 25.62 when considering earnings over the last twelve months as of Q2 2024. The company's revenue growth has been modest at 0.7% during the same period. On the dividend front, the yield is attractive at 4.58%, especially considering the 16.23% growth in dividends over the last twelve months as of Q2 2024. These metrics, along with the fact that analysts predict profitability this year, paint a picture of a company with a solid financial foundation despite short-term headwinds.
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