Collins Stewart Maintains a 'Buy' on Diamondrock Hospitality (DRH); Comments on Outlook

October 23, 2009 11:19 AM EDT

Collins Stewart maintains a 'Buy' rating on Diamondrock Hospitality (NYSE: DRH), raises price target to $9.50.

Collins analyst says, "Hotel Acquisition Discussion Becomes Relevant - While it did not come across as a burning priority, management did indicate it is looking for - and is positioned to make - opportunistic hotel acquisitions. DRH has $300MM+ in readily available funds to purchase distressed hotels - more if it levered its 10 unencumbered hotels. As such, and with no guidance from management, we are now modeling the inclusion of two hotel acquisitions in 1H10- assumed purchase price is $135,000/key for like-sized and quality hotels...However, we are also now including the expected 2009 dividend payment (we estimate $0.35) as well as a dividend in 2010 (early estimate of $0.24), to arrive at an expected total return of 20%. The EV/EBITDA and real estate components of our price target methodology remain unchanged at 11x and $235,000 per key, weighted at 50/50."

To see more analyst ratings on DRH Click Here.

Related Categories

Analyst Comments

Stocks Mentioned

Related Entities

• Collins Stewart
• Dividend
• Life, Style and Real Estate

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?