Marriott Sell Rating Maintained

We maintain our Sell rating on shares of Marriott International (MAR). The operating environment in the lodging sector has weakened substantially in recent quarters. Additionally, the company’s timeshare segment is struggling, with sales down and credit market turmoil preventing the company from completing an expected note sale.

Given our forecast for negative earnings growth in 2009, along with the ongoing uncertainty regarding the state of the economy and its potential impact on Marriott’s lodging and timeshare businesses, we rate the shares a Sell at this time.

Marriott’s low-end properties have experienced the greatest level of operating challenges to this point of the current downturn. The higher-end market as outperformed to this point, as group business remains relatively steady and consumers have yet to “trade down” to lower-cost chains. On the positive side, the lodging industry has shown a willingness to maintain average daily rates (ADR) to this point in the downturn.

Our $15.00 six-month target price equates to an EPS multiple of approximately 12.0x our 2009 estimate, and roughly 7.7x our 2009 EBITDA estimate.

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