UBS upgrades Melia Hotels stock rating, optimistic about profit margin targets

LootboxPhobia · 2026-03-03T11:52:48+00:00

UBS upgrades Melia Hotels stock rating from Sell to Neutral, with the target price raised from €6.70 to €8.60, due to improved company profit margin expansion targets. EBITDA margins and EPS are both expected to be revised upward for 2026 and 2027, with management remaining optimistic about cost control and renovation plans. More evidence is needed to support the 30% profit margin target.

LootboxPhobia

2026-03-03 11:52:48

Abstract generation in progress

Investing.com - UBS upgrades Melia Hotels International SA (BME:MEL) stock rating from Sell to Neutral and raises the target price from €6.70 to €8.60, citing improved profit margin expansion targets that enhance the company’s equity story.

The upgrade follows better-than-expected Q4 2025 revenue performance and increased assumptions for RevPAR growth.

UBS raises its RevPAR growth forecast from 2.5% to 3.4%, leading to approximately 2-3% higher revenue estimates for 2026 and 2027. The company now expects EBITDA margins of 26.7% in 2026 and 27.6% in 2027, up from previous estimates of 26.3% and 26.6%.

Melia outlined its goal to increase EBITDA margins from 26.2% in 2025 to 30% by 2027, achieved through hotel operations optimization, corporate cost efficiency, asset-light expansion, and higher revenue growth from increased throughput.

The company expects a cost inflation rate of 2-3% in 2026 and remains optimistic about net unit growth of 2-3% this year. Management allocated €65 million for renovations at Paradisus Cancún and Gran Melia Don Pepe, along with €15 million for key funding.

UBS raised its EPS forecasts for 2026 and 2027 by 13%, now expecting €0.77 and €0.89 respectively. The company’s valuation for Melia is at 6x EV/EBITDA in 2027, unchanged from previous multiples.

UBS notes that clearer evidence of structural improvements is needed to be confident in the 30% profit margin target, especially considering recent margin stickiness and recent renovations in Mexico and Spain.

This article was translated with AI assistance. For more information, see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.