JPMorgan has recently changed its outlook on Hilton Grand Vacations (NYSE: HGV) from Overweight to Neutral, along with a significant reduction in the price target from $55 to $36. This adjustment comes after Hilton Grand Vacations' second-quarter 2024 performance, which led to a decrease in EBITDA forecasts for the full year.
The company's revised EBITDA guidance now stands at $1.075 billion to $1.135 billion, down from the previous range of $1.20 billion to $1.26 billion. This change reflects the challenges faced by Hilton in the timeshare industry, as seen in the recent report from its peer, VAC.
JPMorgan highlighted the impact of new owner hesitation on Hilton's June results, affecting metrics like volume per guest (VPG) and loan loss provisions. The restructuring of Hilton's sales and marketing team also presented internal challenges for the company.
Looking ahead, JPMorgan has revised its EBITDA forecast for Hilton for the third quarter of 2024, anticipating a 16% decrease. The firm's EBITDA projections for 2024 and 2025 have also been lowered by 12% each.
Despite these downgrades, Hilton Grand Vacations' Q1 2024 performance showed strong results, driven in part by the acquisition of Bluegreen Vacations. However, other analysts like Jefferies have downgraded Hilton's rating due to a slowdown in timeshare demand and changes in the company's sales force structure.
Analysis:
Despite the challenges faced by Hilton Grand Vacations, the company has shown resilience in certain areas. Revenue growth over the last twelve months as of Q2 2024 remains positive, indicating a robust top-line performance. The recent decline in price total return may present an opportunity for investors, especially considering the company's share buyback activities.
Analysts remain optimistic about Hilton's potential, predicting sales growth and profitability in the near future. The company's liquid assets exceeding short-term obligations provide a cushion in a challenging economic environment. With the stock trading near its 52-week low and a fair value estimation at $55, some investors may see the current prices as attractive.
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