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Hilton Grand Vacations stock downgraded to neutral by JPMorgan

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JPMorgan has shifted its stance on Hilton Grand Vacations (NYSE: NYSE:), moving from an Overweight to a Neutral rating, coupled with a significant price target reduction to $36 from the previous $55.

The adjustment follows Hilton Grand Vacations’ second-quarter 2024 performance, which led to lowered EBITDA forecasts for the full year.

The company’s newly revised EBITDA guidance, with a midpoint 10% lower than the earlier range of $1.20 billion to $1.26 billion, now stands at $1.075 billion to $1.135 billion.

The change mirrors the trends seen in the timeshare industry, as reflected in the recent report from Hilton’s peer, VAC. Hilton’s June results were notably affected by new owner hesitation, impacting the volume per guest (VPG) and an uptick in default and delinquency trends, which in turn increased the provision for loan losses.

JPMorgan also noted the internal challenges Hilton faced due to the restructuring of its sales and marketing team. For the third quarter of 2024, the bank has revised its EBITDA forecast for Hilton down by 16%, with contract sales expected to drop by 4% to $813 million.

The loan loss provision is anticipated to be 16% of owned contract sales, up from the previous 14%.

The firm’s EBITDA projections for 2024 and 2025 have been reduced by 12% each to $1.105 billion and $1.183 billion, respectively.

These downgrades reflect concerns over persisting negative trends in VPG and loan loss metrics, which are not expected to improve in the short term against the backdrop of weakening consumer spending, particularly on high-cost discretionary items that form the core of Hilton’s business model.

In addition, Hilton is facing unique challenges integrating its recent acquisition of Bluegreen Vacations (NYSE:). JPMorgan suggests that the market has now fully recognized the potential difficulties of this integration, which were previously underestimated. For investors interested in the timeshare sector, JPMorgan favors TNL, which maintains an Overweight rating.

The new year-end 2025 price target for Hilton is based on a 6.0x multiple of the estimated 2025 enterprise value to EBITDA, a reduction from the previous multiple, aligning with the valuation of Hilton’s timeshare peer VAC and close to TNL’s multiple.

Hilton’s current trading multiples are at 6.7x and 5.9x JPMorgan’s 2024 and 2025 EBITDA forecasts, with free cash flow yields of 15% and 19%, respectively.

Hilton Grand Vacations’ Q1 2024 performance boasted robust results, with contract sales reaching $631 million and an EBITDA of $270 million, largely due to the contribution from Bluegreen Vacations, which was acquired earlier this year.

However, Jefferies downgraded Hilton Grand Vacations’ rating from Buy to Hold, citing a slowdown in timeshare demand and changes in the company’s sales force structure as reasons for a less certain outlook.

Furthermore, Hilton Grand Vacations expanded its board of directors with the appointments of Christine Cahill and Gail Mandel. These appointments are expected to provide valuable insights and guidance to the company’s strategic direction.

InvestingPro Insights

Amidst the revised EBITDA guidance and the challenges highlighted by JPMorgan, Hilton Grand Vacations (NYSE:HGV) is showing signs of resilience in certain areas. According to InvestingPro data, the company’s revenue growth over the last twelve months as of Q2 2024 stands at 9.45%, indicating a robust top-line performance. Despite the recent price total return trends showing a decline, with a 1-week price total return of -10.53%, the company’s management has been actively engaging in share buybacks, as noted in one of the InvestingPro Tips, which could signal confidence in the company’s value proposition.

Furthermore, analysts remain optimistic about Hilton’s potential, predicting sales growth in the current year and profitability, suggesting that the underlying business might still have strong fundamentals. This is supported by the fact that Hilton’s liquid assets exceed its short-term obligations, providing a cushion in a challenging economic environment. With the stock trading near its 52-week low and a fair value estimation by analysts at $55, some investors might view the current prices as an attractive entry point.

InvestingPro also provides additional insights for investors looking to delve deeper into Hilton Grand Vacations’ financial health and market performance. Currently, there are six more InvestingPro Tips available on https://www.investing.com/pro/HGV, offering a more comprehensive analysis for those interested in the timeshare sector and considering HGV’s stock.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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Palestinians say Israeli strike killed 22 in shelter, army says militants hit

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By Dawoud Abu Alkas and Nidal al-Mughrabi

GAZA/CAIRO (Reuters) -Palestinians said an Israeli strike killed at least 22 people in a school sheltering displaced people in southern Gaza City on Saturday, while the Israeli military said the attack targeted a command centre of militant group Hamas.

The Gaza health ministry said most of those killed were women and children. The Hamas-run government media office said 13 children and six women were among the dead.

The military said it hit a Hamas command centre embedded in the compound that previously served as a school, repeating an accusation that the group uses civilian facilities for military purposes. Hamas denies that.

Reuters footage from the site showed blasted walls, wrecked and burnt furniture, and holes in the ceiling of one room as people tried to salvage what they could of belongings.

“The women and their children were sitting in the playground of the school, the kids were playing, and suddenly two rockets hit them,” said one witness Said Al-Malahi.

Some of the dead were wrapped in blankets and carried away on donkey carts, as ambulances transferred other bodies.

“I couldn’t take it, I did not see a single man that is injured, it was all women and children, let the Arab countries rejoice, let them rejoice and clap for (Israeli Prime Minister Benjamin) Netanyahu and the United States of America,” said another eyewitness, Ahmed Azzam, bitter that regional neighbours were not taking a tougher line against Israel.

MEDICS KILLED

In Rafah, in the southern Gaza Strip, the Gaza health ministry said four health workers were killed by an Israeli strike that hit ministry warehouses. Ambulance crews could not reach the dead or treat the wounded, it added.

In a statement, the Israeli military said forces, operating in Rafah since May, have killed dozens of militants in recent weeks and dismantled military infrastructure and tunnel shafts.

Israel’s demand to keep control of the southern border line between Rafah and Egypt has been a major sticking point in international efforts to conclude a ceasefire deal.

Hamas says it is focused on an agreement to end the war and get Israeli forces out of Gaza, while Israel says the war can only end once Hamas is eradicated. Another sticking point has been the specifics of an exchange of Israeli hostages for Palestinian prisoners held by Israel.

© Reuters. Palestinians inspect a school, which was sheltering displaced people, after it was hit by an Israeli strike, amid the Israel-Hamas conflict, in Gaza City, September 21, 2024. REUTERS/Dawoud Abu Alkas

This war in the decades-old Israeli-Palestinian conflict was triggered on Oct. 7 when Hamas attacked Israel, killing 1,200 people and taking about 250 hostages, according to Israeli tallies.

Israel’s subsequent assault on the enclave has killed more than 41,000 Palestinians, according to the local health ministry, and displaced nearly the entire 2.3 million-strong population.

(Reporting and writing by Nidal al-Mughrabi; Additional reporting by Dawoud Abu Alkas in Gaza, Adam Makary in Cairo and Ali Sawafta in Ramallah; Editing by Andrew Heavens and Andrew Cawthorne)

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Trump to visit North Carolina as scandal swirls around Republican ally

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By James Oliphant

(Reuters) – Republican presidential candidate Donald Trump will not be joined by his party’s embattled pick for North Carolina governor when he visits the critical electoral state on Saturday, the Trump campaign said.

Trump previously endorsed Mark Robinson, who was the subject of an explosive CNN report this week that he once called himself a Black Nazi and proposed bringing back slavery in comments posted on a pornography website. 

Robinson, the state’s lieutenant governor, denied the allegations and has said he will remain in the governor’s race. His campaign could not be reached for comment.

Some Republicans fear his candidacy in one of the country’s highest-profile down-ballot races this year could damage Trump’s chances in the battleground state, where polls show Trump essentially tied with Democratic rival Kamala Harris ahead of the Nov. 5 election.

Ahead of Trump’s afternoon rally in Wilmington, North Carolina on Saturday, the Democratic National Committee launched new advertising across the cities of Raleigh, Charlotte and Greensboro tying the former president to Robinson. 

The billboard ads show a photo of the two men together, along with direct quotes from Trump previously calling Robinson an “outstanding person” and an “incredible gentleman.” 

The Harris campaign also began running a TV ad in the state on Friday featuring Trump’s past praise for Robinson.  

In March, Trump called Robinson “Martin Luther King on steroids” after Robinson delivered remarks in Greensboro, and Robinson appeared at a Trump event as recently as last month. Robinson would be the state’s first Black governor if elected.  

Robinson has a history of inflammatory rhetoric, at times referring to Muslims as “invaders” and calling gay and transgender people “filth.” He has made comments denying the Holocaust. 

Trump has yet to address the latest allegations against Robinson. One Trump adviser, who asked not to be named, said Trump should stay silent and not fan the controversy.

“Ignore it, and let it die,” the adviser said.

Trump’s campaign did not respond to a request for comment.

Harris’ campaign and its allies have made a significant investment in North Carolina, including two stops by the vice president last week. A Democratic presidential candidate has not won the state since 2008, but voters elected Democrat Roy Cooper as governor in 2016 and 2020. 

Robinson had been trailing his opponent, Democrat Josh Stein, even before the CNN report, suggesting that he could be a drag on Trump’s chances in the state if some disaffected Republicans stay home on Election Day or defect to Harris. 

Chris Cooper, a professor of political science at Western Carolina University, said in a state that Trump won by just 1.3 percentage points in 2020, the Robinson scandal could damage Republicans’ chances up and down the ballot in November, including Trump’s. 

“If some people feel that the Republican brand is stained enough that they’d rather stay home, then that’s going to matter,” Cooper said. “It doesn’t take a big difference to flip the state.”

© Reuters. A Secret Service officer stands next to bulletproof glass on a stand from which Republican presidential nominee and former U.S. President Donald Trump will hold his campaign rally in Wilmington, North Carolina, U.S., September 21, 2024.  REUTERS/Carlos Barria

Thom Tillis, a Republican U.S. senator from North Carolina, responded to the allegations against Robinson by telling voters on X that “we must focus on the races we can win,” citing the presidential contest but omitting the gubernatorial vote.

“If Harris takes NC, she takes the White House,” Tillis wrote. “We can’t let that happen.” 

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GM to begin laying off about 1,700 workers at Kansas plant, WARN notice shows

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(Reuters) – General Motors (NYSE:) will begin laying off 1,695 workers at its Fairfax Assembly plant in Kansas, the company said in a Worker Adjustment and Retraining Notification (WARN) notice earlier this week.

The first of two rounds of layoffs will begin Nov. 18 and will include the temporary layoff of 686 full-time workers and the termination of 250 temporary employees, Automotive News reported on Saturday citing a company filing to the state of Kansas.

Starting Jan. 12, 759 full-time workers will be temporarily laid off, the report added.

GM did not immediately respond to a Reuters request for comment on the details of the latest layoffs.

© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. .  REUTERS/Rebecca Cook/File Photo

Earlier in May, GM had said that it would pause production of the Cadillac XT4 after January 2025 in Kansas, resulting in layoffs of production employees until production resumes in late 2025 for both the Bolt EV and XT4 on the same assembly line.

The company had also said in August that it was laying off more than 1,000 salaried employees at its software and service units worldwide.

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