Vail Resorts shares drop following gloomy forecasts
Vail, CO Colorado
VAIL, Colorado ” Vail Resorts’ shares dropped almost 6 percent on Friday after a research analyst predicted that the Colorado company would have rough 2009 and 2010 seasons as people cut back on resort vacations.
According to Deutsche Bank research analyst Chris Woronka, Vail Resorts’ earnings will be much lower than originally predicted when the company makes its second quarter earnings announcement Wednesday.
Also, estimates for the resort’s 2010 earnings look “much too high,” the report said.
Vail Resorts declined to comment on the report.
The analyst reduced his prediction of the cost of Vail Resorts shares from $22 to $17. As of mid-day on Friday, Vail’s stocks had dropped 97 cents to $16.07. The company stocks ended the day at $16.08 per share.
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The stock has traded between $14.79 and $52 during the past 52 weeks.
Woronka said that although Vail Resorts did not release its January and February numbers, he had heard that skier visits dropped off in January, and he doesn’t expect it will get better as the season continues.
“This will continue to unwind heading into next season. The economy is not going to be in a significantly better place,” he said. “The typical consumer, especially the northeast-based destination skier is going to have to make some difficult decisions.”
Vail Resorts has enjoyed years of steady growth, and the company has made good decisions and is on solid financial ground, Woronka said. However, the Vail customer is in the “very early innings” of a very painful process, he added.
“A lot of (customers) have lost jobs. Many have lost money in the stock market and on their houses. As they grapple with that, it’s going to be difficult for many people to make that trip out to Vail,” he said. “A lot of customers are going to redefine what’s really necessary.”
Many vacationers might opt for the less expensive, local slopes, or lower-priced entertainment such as theme parks, midscale hotels and restaurants instead, said the analyst’s report.
Vail Resorts might still report strong numbers for 2009, thanks to sales from real estate projects such as the Chalets at the Lodge of Vail, the Arrabelle, and other properties.
However, in the next couple years, other than Vail’s Ritz Carlton Residences, which will be completed in 2010, “there will be nothing to close,” Woronka said.
He hesitated to say that Vail might fare any better than other ski resorts around the country.
“Vail is pretty well positioned (financially), but I’m not sure if they’ll have any more luck in getting people to their mountain,” he said. “People are much more price sensitive now.”
Staff Writer Melanie Wong can be reached at 970-748-2928 or email@example.com.