Vail Resorts may look to Europe for growth

Vail Resorts (New York Stock Exchange:MTN) is expanding in many major regions of the United States, including new facilities in the East, as ski resort operators continue to battle severe weather trends.

Morgan Stanley analyst Megan Alexander believes in difficult weather trends In recent years, Vail’s newer regions have seen increased volatility in earnings. He also warned that increased competition in the US and a nascent European strategy limited prospects for the sector’s growth to accelerate again.

Now, Alexander and the MS analyst team see the growth story for Vail Resorts’ (MTN) business unit coming to a somewhat dead end, primarily due to market share competition in the United States. The company has expanded its network to approximately 2.4 million passholders, representing approximately 20% of total North American industry participants, but unit growth has slowed recently. Increasing penetration in the US looks difficult for Vail Resorts (MTN) as remaining M&A opportunities remain limited, with focus shifting to Europe as a key white space growth opportunity .

Alexander pointed out that the European ski industry is many times larger than the U.S. ski industry in terms of number of visitors, participants and number of resorts. The Alpine regions of Austria, France, Italy, and Switzerland alone receive 128 million ski visitors annually, twice as many as in the United States. Europeans are also much more enthusiastic about the sport of skiing, with participation rates in the Alps around 20% compared to low single digits in the United States.

“Europe has more than 2,000 resorts, more than four times as many as the United States, but similar to the United States, visitors are concentrated in the large resorts, with about 50% of visitors coming from just 43 resorts in the Alps. The market is very similar to the US. In the early 2000s, before the Epic Pass was launched, the ownership base was dispersed (Compagnie Des Alpes, the largest multi-resort operator, (operates 10 major ski resorts in the French Alps), resulting in relatively affordable day pass prices (up to $62 per person) compared to larger resorts. The US average today is about $165).

The logic may be in place for Vail Resorts (MTN) to increase its profile in Europe, but Morgan Stanley believes this development will take time to pay off and bear fruit. The company currently has an equal weight rating on Vail Resorts (MTN) and a price target of $242.

Track Vail Resorts (MTN) stock price 0.88% It rose in mid-morning trading on Tuesday. The stock price is up nearly 6% year-to-date. The dividend yield for new buyers at the current stock price is 3.98%.