Credit swiss says vail has pricing power??
Vail Resorts. Inc. (MTN) OUTPERFORM J. Simkins
CP: US$ 42.39 TP: US$ 55 CAP: US$ 1.5b
Updating Estimates Following Guidance Revision; Maintain Outperform
3Q Housekeeping: Given Vail's recent release of late season ski
metrics and commentary that resort reported EBITDA
results for fiscal 2012 would fall slightly below the low end of guidance
issued in early March, we are tweaking our fiscal
2012 resort EBITDA estimates to $202.9m (-$9.7m). We see MTN shares as
attractive given the company's asset quality,
long-term pricing power, strong balance sheet, free cash flow, and good
management. Keep in mind that Vail is heading
into what is typically a quiet period for shares through the summer
months, and patient investors could be rewarded as
interest in the stock heats up heading into the fall/winter period.
Pass Sales Primary Driver: Vail's recent commentary that season
pass sales for the spring season will exceed the prior
year sales in both units and dollars was encouraging. We highlight that
this commentary came on May 1, with a full month
left in the spring selling period. This suggests that Vail could handily
exceed the prior year, which is remarkable given that
the company was lapping 19%/27% comps through May 2011 (units/sales
dollars), particularly following a tough snow year.
Catalysts: 1) Fiscal 3Q results (June 9), 2) integration of
Kirkwood, 3) share repurchases/return of capital, 4)
commencement of ski season (December).
Valuation: Our $55 target is based on 8x/11x our 2014E
mountain/lodging EBITDA discounted back, plus 1x real estate
book value. We are lowering 2012/2013/2014 EPS estimates to
$0.38/$0.94/$1.18 from $0.54/$1.12/$1.37 respectively.ss