On Friday, BofA Securities adjusted its stance on Vail Resorts (NYSE:MTN), downgrading the stock from Buy to Neutral and reducing the price target to $250 from the previous $285. The shift in rating comes as the firm anticipates a more challenging environment for the company moving forward.
The downgrade is driven by several factors that could impact Vail Resorts' financial performance. BofA Securities highlighted concerns about the forecast for fiscal year 2024, noting that weak visitation numbers could pose a risk to the company's guidance. Additionally, slower than expected year-over-year organic growth is seen as a risk to fiscal year 2025 estimates.
Weather volatility was also cited as a concern relative to the company's outlook. This unpredictability in weather patterns could affect the ski resort operator's performance, given its reliance on favorable winter conditions for its business.
Despite these challenges, the price target of $250 is still based on a multiple of 13 times the firm's revised estimate for Vail Resorts' fiscal year 2025 EBITDA, which now stands at $947 million. The adjustment reflects the analyst's recalibrated expectations for the company's earnings before interest, taxes, depreciation, and amortization.
The revised price target and rating suggest that BofA Securities sees limited upside for Vail Resorts' shares in the near term, given the various risks outlined. This new position from the firm provides investors with an updated outlook on the stock's potential performance in the coming years.
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