Shares of Vail Resorts (MTN), an American mountain resort company, are sliding after the company reported ski season metrics for the beginning of the season. Along with that data, CEO Rob Katz said its FY19 EBITDA would miss the low end of its previous guidance. Following the company's announcement, BofA/Merrill downgraded Vail Resorts to Neutral from Buy.
EBITDA GUIDANCE LOWERED: Vail CEO Rob Katz said, "Despite the good conditions, our destination guest visitation was much lower than anticipated in the pre-holiday period, particularly December 1st through December 21st. We believe this was driven by destination guests' concerns from two prior years of poor pre-holiday conditions at our U.S. resorts and we did not see the pickup in short-term bookings we had expected. Results over the holidays were in line with our expectations across our resorts except at Whistler Blackcomb and our Tahoe resorts which had results below our expectations primarily driven by increased weather variability at those resorts over the holidays and lower than expected destination and international visitation. Primarily as a result of missing our expectations in the pre-holiday period, we now expect full year Resort Reported EBITDA guidance to be slightly below the low end of the guidance range we issued on September 28, 2018. Our guidance assumes normal conditions at our resorts, a stable economic environment and the currency rates in place when the guidance was originally issued."
BOFA CUTS VAIL RESORTS TO NEUTRAL: BofA Merrill Lynch analyst Shaun Kelley downgraded Vail Resorts to Neutral from Buy and cut his price target on shares to $200 from $260, following Vail's lowered guidance. Kelley said this was Vail's first major earnings miss not related to snowfall in many years and could represent customer mix and spend issues, and or pricing strategy. Kelley said if customer behavior is changing, it represents further risk to estimates and he expects a further deceleration in pass sales growth ahead. The analyst lowered his FY19 Resort EBITDA view to $715M.
PRICE ACTION: Shares of Vail Resorts are down 14.3% to $183.88 in late morning trading on Friday. This drop puts the shares near their 52-week low of $181.96.