Marriott Vacations Worldwide: Sell Rating Amid Unsustainable Cost-Cutting and Below-Consensus Guidance

In a report released today, Stephen Grambling from Morgan Stanley maintained a Sell rating on Marriott Vacations Worldwide Corporation (VAC – Research Report), with a price target of $87.00.

Stephen Grambling has given his Sell rating due to a combination of factors impacting Marriott Vacations Worldwide Corporation’s financial outlook. Despite the company reporting a fourth-quarter EBITDA that exceeded expectations, this was primarily driven by lower general and administrative expenses, which may not be sustainable in the long term. The guidance for 2025 contract sales was above consensus; however, the EBITDA and EPS projections were set below market expectations, indicating potential ongoing challenges with provisions and expenses.
Grambling’s analysis suggests that while there was an improvement in volume per guest and overall vacation ownership interest sales, the reliance on cost-cutting measures to achieve the fourth-quarter results raises concerns about future profitability. The pressure on margins, a critical component of Grambling’s underweight thesis, combined with the below-consensus guidance, suggests that the stock may face downward pressure. Investors are advised to consider these factors when evaluating the potential risks associated with holding VAC shares.