Earnings Preview: Marriott International

| About: Marriott International, (MAR)
Marriott International (NYSE:MAR) is expected to report Q4 earnings Thursday with a conference call scheduled for 10:00 a.m. ET.

Guidance

Analysts are looking for a profit of 62c on revenue of $4.04B. The consensus is 60c to 65c for EPS, and revenue of $3.78B to $4.36B, according to First Call. The company forecast Q4 EPS of 61c to 63c and 2008 EPS of $2.10 to $2.25 vs. First Call consensus of $2.13.

Analyst Views

Deutsche Bank analysts believe the next two quarters are going to be "rough" for U.S. hotel operators. In addition to the credit crunch, higher gas prices and turmoil in the housing market, the analysts said a lack of debt financing has halted the M&A activity that had previously fueled the sector.

JMP Securities analysts lowered their target on Marriott to $50 from $56 and held their Outperform rating and thinks the company's valuation is attractive. Despite a "less favorable economic outlook," JMP believes Marriott may be the best defensive play in the lodging sector during an economic downturn. JMP said that although Marriott's RevPAR growth outlook for 2008 is 5%-7%, it may soon pare down that outlook. Marriott has a steady cash-flow model driven by stable management and franchise fees, which makes it attractive, according to JMP.

Lehman Brothers analysts recently reduced Marriott's target price to $38 from $53, as they believe the company's performance is likely to be negatively impacted in 2008 and 2009 by a slowing growth environment. Jefferies, too, lowered Marriott's target to $50 from $56 to reflect the current macro-uncertainty. The stock remains their top pick in the lodging sector given its attractive valuation and strong business model; the firm said the company's strong pipeline and international exposure will help it outpace its competitors.

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Tagged: , Lodging, Earnings
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