Credit Suisse Upgrades PebbleBrook Hotel Trust (PEB) to Outperform

Credit Suisse upgraded PebbleBrook Hotel Trust (NYSE: PEB) from Neutral to Outperform with a price target of $50.00 (from $51.00) noting recent underperformance.

Analyst Ian Weissman commented, "We are upgrading Pebblebrook (PEB) to Outperform from Neutral as the stock has materially underperformed its peers since it peaked in mid-February (around 4Q earnings)—down 16% vs. 9% for its peers. Despite the superior quality of its portfolio, and our expectations for PEB to deliver sector leading earnings over the next 2 years (20%+), the stock is now attractively valued trading at a 13% discount to NAV. Our $50 PT (down from $51) implies a 22% total return over the next 12 months."

The analyst listed the top five reasons they like the stock:

1) PEB owns the highest quality hotel portfolio in the sector—consistently ranking #1 in our proprietary TripAdvisor survey.

2) PEB is run by one of the best management teams in the business, while its concentration on the West coast (65% of EBITDA), should help the company deliver sector leading RevPAR growth through 2016.

3) Stock rarely trades at a discount to NAV—let alone 13%. Attractive entry point for investors.

4) Significant embedded growth with margin upside of 150-200bp (minimum).

5) Attractive redevelopment pipeline--$100mn+ will further improve overall asset quality and drive returns.

For an analyst ratings summary and ratings history on PebbleBrook Hotel Trust click here. For more ratings news on PebbleBrook Hotel Trust click here.

Shares of PebbleBrook Hotel Trust closed at $41.73 yesterday.

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