BofA Raises Hilton Grand Vacations Price Target to $51, Keeps Neutral Rating

BofA raised Hilton Grand Vacations' price target to $51 from $42.50 and maintained a Neutral rating. The company reported Q2 EBITDA of $278M, in-line with estimates, and reiterated its EBITDA outlook. Hilton Grand needs a second-half EBITDA acceleration to meet guidance, but is aided by lower sales/marketing costs, rental improvements, and strong club/resort fees.

Hilton Grand Vacations (NYSE: HGV) reported its Q2 2025 financial results, showing a mixed performance with some encouraging signs and areas for improvement. The company's contract sales increased by 10.2% to $834 million, but both GAAP revenue and non-GAAP adjusted earnings per share missed analyst expectations. GAAP revenue was $1.266 billion, falling short of estimates by $111.6 million, while adjusted EPS (non-GAAP) was $0.54, down from an expected $0.81 [1].

The company's adjusted EBITDA attributable to stockholders was $233 million, in line with estimates, while contract sales grew by 10.2% year over year. However, adjusted free cash flow dropped sharply by 63.5% to $135 million compared to the same period last year [1].

Key segments showed varying performances. Real estate sales and financing revenue grew to $760 million, but profit margins were pressured due to net deferrals from ongoing projects in Hawaii and Japan. The resort operations and club management segment saw revenue grow by $19 million to $405 million, but adjusted EBITDA slipped to $149 million. The rental and ancillary services segment reported a loss of $8 million, down from a $7 million profit in the prior year [1].

Hilton Grand Vacations' strong brand and strategic acquisitions continue to drive growth. The company's rebranding projects and expansion of the HGV Max member platform are aimed at boosting operating efficiencies and customer engagement. The company's inventory management strategy, with owned inventory representing 90.6% of the contract sales pipeline, is a key risk factor, as it places more risk on the balance sheet [1].

The company's financial services arm contributed significantly to revenue and profit, with most loans carrying interest rates around 15.0%. Securitization of its loan book remains a core liquidity strategy. Hilton Grand Vacations does not currently pay a dividend, but shareholder returns were highlighted by share repurchases: 4.1 million shares were repurchased for $150 million in Q2 2025 [1].

Bank of America (BofA) raised Hilton Grand Vacations' price target to $51 from $42.50 and maintained a Neutral rating. The company reported Q2 EBITDA of $278 million, in line with estimates, and reiterated its EBITDA outlook. Hilton Grand needs a second-half EBITDA acceleration to meet guidance, but is aided by lower sales/marketing costs, rental improvements, and strong club/resort fees [2].

For investors and observers, membership growth, the pace of Bluegreen integration, and recovery in profit margins are key watch points for the next periods. Potential risks include further pressure on cash flow, slower net owner growth, and the impacts of greater reliance on owned (rather than fee-for-service) inventory. The company also flagged ongoing macroeconomic risks that could affect consumer demand [1].

References:
[1] https://www.mitrade.com/au/insights/news/live-news/article-8-1007033-20250802
[2] https://www.marketbeat.com/stocks/NYSE/HGV/news/