FBR Capital Upgrades Hospitality Properties Trust (HPT) to Outperform Following Sell-Off
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FBR Capital upgraded Hospitality Properties Trust (NASDAQ: HPT) from Market Perform to Outperform with a price target of $33.00 (from $32.00).
Analyst Bryan Maher commented, "HPT continues to outperform its peers with 3Q16 comparable hotel RevPAR up 3.8% versus the industry at 3.3%. In addition, HPT continues to source attractive acquisition targets in a slow transaction market and can use its significant financial resources to close on deals quickly when needed. However, it will also, as we have seen, be a shrewd buyer and will re-trade (lower price) or walk away from a deal when diligence warrants—as we saw in 3Q16. From a capital markets standpoint, the REIT is both patient and opportunistic, as reflected in its $389 million equity offering (at $30.75/share) in 3Q16, after a rally in the shares, with proceeds going to reduce leverage and fund acquisitions. In short, we believe the recent retracement in HPT shares—while still outperforming many of its peers, combined with a secure 7.65% yield—is overdone. Our valuation analysis now yields a $33 price target (from $32) at 4Q17, suggesting a potential total return of over 30%. As such, we are upgrading the shares back to Outperform from Market Perform."
Shares of Hospitality Properties Trust closed at $26.65 yesterday.
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