J.P. Morgan analyst Matthew R. Boss reiterated the Underweight rating on Vail Resorts, Inc. (NYSE:MTN), raising the price forecast to $167 from $166.
The analyst suggests that while Vail Resorts is well-positioned for the future due to its top-tier resort portfolio, de-risked operating strategy with its Epic Pass options, and a strong customer base of higher-income, avid skiers, four key challenges could impact the business.
These include the normalization of industry trends, leading to a decline in season pass sales to start the year, the saturation of the season pass model, potential resistance to further price increases after three years of 8% hikes, and a shift in customer demographics, Boss writes.
This combination of factors points to potential downside risks in both earnings and the company’s overall valuation.
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In its second-quarter results released yesterday, the company reported quarterly earnings of $6.56 per share, which beat the consensus estimate of $6.34.
Quarterly revenue came in at $1.14 billion, which met the analyst consensus estimate and is an increase over revenue of $1.08 billion from the prior year’s quarter.
Boss notes that local visitation has improved year-over-year in the reported quarter, which aligns with internal expectations, driven by more typical weather patterns, especially on the East Coast.
Meanwhile, destination visitation is facing a shift, with consumers delaying their visits to later in the season, resulting in a mixed headwind that impacts ancillary revenue.
Specifically, local guests are spending less than destination guests, leading to a decline in revenue per skier visit.
Despite these shifts, management has confirmed that destination guest spending remains strong, with no signs of a pullback from consumers thus far, even amid ongoing macroeconomic concerns.
Following the results, the analyst models FY25 EPS of $7.39 and FY26 EPS of $7.87.
Price Action: MTN shares are trading higher by 7.02% to $164.37 at last check Tuesday.
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Latest Ratings for MTN
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Mar 2022 | Deutsche Bank | Maintains | Hold | |
| Jan 2022 | JP Morgan | Maintains | Neutral | |
| Dec 2021 | Deutsche Bank | Maintains | Hold |
View More Analyst Ratings for MTN
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This article Vail Resorts Faces Several Headwinds Despite Its Portfolio Strength, Analyst Says originally appeared on Benzinga.com
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