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Leisure Travelers May Have Moved Marriott Stock as High as it Can Go

Marriott stock looks overvalued, but technical indicators point to a move higher. Only time, and continued occupancy growth, will tell if bulls or bears will drive the stock price. That's...

This story originally appeared on MarketBeat

Marriott Stock Should Stay on Your Watchlist For Now 

After delivering a strong earnings report, shares of Marriott International (NASDAQ: MARare trading above its 52-week high. The relative strength index (RSI) suggests that the rally in MAR stock may be ready to reverse. contributor/ - MarketBeat

And that bearish sentiment is being echoed by the 13 analysts tracked by MarketBeat. The stock is trading about 13% above the consensus target. However, there are two sides to a story. And in the two days, since the company reported earnings, Marriott has received two price target increases. And although both of those analysts keep MAR stock below its current price, investors should pay close attention to see if further upgrades are in the offing.  

This is creating an interesting dynamic for investors. On the one hand, the stock looks overvalued; on the other hand, technical indicators point to the stock going higher.  

The Comps Will Start to Get Harder 

The company reported earnings that were in line with analysts’ expectations for 99 cents per share. And revenue came in at a better-than-expected $3.95 million as opposed to expectations for $3.71 million.  

Obviously, those numbers are significantly better than the numbers reported in the same quarter in 2020. It’s also obvious that the results are not as good as the numbers Marriott posted in 2019.  

That’s where things get interesting for MAR stock. We’re approximately one year since the announcement that the Covid-19 vaccine from Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) received emergency use authorization. Almost on command, MAR stock began to recover its pandemic losses. But that recovery was stalled first because of the uneven recovery and second due to the emergence of the Delta variant.  

With that in mind, this may be the last quarter in which Marriott is dealing with a low bar to jump over. Now it will be imperative for the company to continue to show that revenue and earnings are moving closer to pre-pandemic levels. 

What Will the New Normal Look LIke? 

I’ve had several occasions to stay in hotels (including full disclosure in some Marriott properties) in the last six months. The words new normal are very apt. There are still many concessions being made to the pandemic. One of the most notable is the current housekeeping situation which remains something that guests should not expect for a multi-day stay. 

In two cases, the hotels I was staying at were benefiting from wedding traffic. And that gave the hotel a somewhat “normal” feel. On a couple of other occasions, it was obvious that it will be awhile before occupancy levels are back to normal. Some of that may resolve itself if, and when, business travel resumes. But nobody can accurately forecast what business travel will look like, particularly with the issue of vaccine mandates hanging in the air.  

However, Marriott did say that special corporate bookings are down less than 40% year-over-year.  

Leisure Travel is Boosting the Stock  

On that note, on the company’s most recent earnings call, Marriott made it clear that the increase in leisure travel was offsetting any concerns about the Delta variant. And Marriott added 17,456 rooms worldwide to accommodate that travel. 

And here’s an interesting aside. The pandemic blurred the lines between business and leisure travel. Many individuals managed to continue working even while engaging in leisure travel. Based on the news coming from many companies, this situation may repeat itself throughout 2022 and perhaps beyond.  

Is MAR Stock a Buy? 

As I pointed out in the opening, something has to give with Marriott stock. I was bullish on Marriott as a recovery stock, because I believe the company is a best-of-breed among hotel stocks. However, at this time, I’d like to see more before buying MAR stock.