Friday, February 3

Bank of America, ‘neutral’ in Meliá despite the impact of omicron

Bank of America (BofA) has decided to maintain the ‘neutral’ rating for Meliá Hotels International, since, although it is in a “good recovery position”, it considers that the short-term trading trends “should be affected by the omicron variant”.

For the fiscal year of 2022, the entity’s report estimates revenues of 1,400 million euros and a gross operating profit (Ebitda) of 300 million euros, since, despite the new restrictions due to the pandemic, the document points out that the important summer season is “quite assured” for this year.

The good position of Meliá Hotels is due to the strong demand for leisure, with an occupancy of 60% of the rooms in resorts, due to the “encouraging” results of the third quarter on demand in the Canary Islands and the Caribbean.

However, BofA stresses that short-term trading trends should be affected by the omicron variant especially in European markets. This could also weaken, although it is already at a low level, the activity of meetings, congresses and events (MICE) in the Caribbean for the winter season.

What’s more, sees opportunities for group Ebitda margin to exceed pre-pandemic levels, but this would be more for 2024.

Meliá’s net debt position is high and we believe the valuation leaves limited upside potential. However, he has stated that Meliá recently confirmed that one of the group’s priorities is to reduce debt.