HGV - Travel + Leisure started at Sell by BofA

2023-04-17 11:46:20 ET

In a set of new initiations at Bank of America, Travel + Leisure Co ( NYSE: TNL ) was started at a Sell-equivalent while Hilton Grand Vacations ( NYSE: HGV ) was initiated at Neutral.

Equity analyst Dany Asad explained that while Travel + Leisure ( TNL ) touts a large member base and has a strong track record, with a prudent push towards bettering the credit quality of that base. However, macroeconomic pressure on the company’s consumers leave the stock unattractive at this point.

“We like TNL’s pivot to improve the credit quality of its customers, its 60% free cash flow conversion and capital return track record, but are concerned by the near-term pressure on earnings from price normalization, travel & membership ramping below expectation and macro risk,” Asad wrote.

He assigned the stock a $42 price target alongside the Underperform rating. Meanwhile, he assigned a Neutral rating to Hilton Grand Vacations ( HGV ).

“While we still see room for recovery and a better growth profile for HGV than peers, pricing is well ahead of pre-COVID levels and raises sustainability questions, especially in the context of a choppy/uncertain macro environment,” he told clients. “Valuation is below long-term averages on EBITDA but worse than peers on free cash flow yield, and as such we initiate with a Neutral rating and a $50 price objective.”

Read more on the earnings expectations for Hilton Grand Vacations .

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