Jefferies reset its ratings in the timeshare sector with downgrades on Hilton Grand Vacations (HGV) and Travel + Leisure Co. (TNL) to Hold ratings. Marriott Vacations Worldwide Corporation (NYSE:VAC) is slotted a notch above with a Buy rating.
“With the looming recession and stabilizing credit market, we believe the prospects for the timeshare industry and the stocks could prove positive over the longer-term but range-bound in the near term,” warned analyst David Katz.
Katz and team think that a hard landing for the U.S. economy is not off the table, and see stocks in the sector trading at 7X to 8X conservative 2024 estimates vs. the historical range of 5X to 10X. Historically, the timeshare sector has underperformed in risk-averse markets and there is some risk seen that estimates move down for late 2023 and beyond given declining VPG as consumers decrease discretionary spending, and financing margins weaken from rate hikes. However, Marriott Vacations (VAC) remains Buy-rated due to its business model quality and scale and lesser sensitivity to VPG declines.
Compare growth, profit, and valuations metrics on HGV, TNL and VAC.
Marriott Vacations is the top timeshare pick at Jefferies
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