Goldman Sachs Upgrades Home Inns (HMIN) to Conviction Buy

October 10, 2013 10:03 AM EDT Send to a Friend
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Price: $27.31 +2.44%

Rating Summary:
    7 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 17 | New: 16
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Goldman Sachs upgraded Home Inns (NASDAQ: HMIN) from Buy to Conviction Buy with a price target of $43.00 (from $33.00). Analyst Justin Kwok made note of improving margins and free cash flow.

"We maintain our Buy rating and add Home Inns to our regional Conviction List due to (1) Largest hotel portfolio to participate in the macro recovery: as an established dual-brand portfolio, we see both the core Home Inns brand and Motel 168 to make up the largest hotel chain in China with 1,953 existing hotels across 271 cities in China through June 2013, offering broad and direct exposure to the recovery in domestic business travel demand; (2) Improving margins to drive FCF generation: we think the company could achieve 2pp/1pp margins expansion in 2013E/2014E, and is on track to turn FCF positive in 2013E; (3) undemanding valuation: the stock trades at 7.0X EV to 2014E EBITDA, versus its historical average/-1SD of 9X/ 6X," said Kwok.

For an analyst ratings summary and ratings history on Home Inns click here. For more ratings news on Home Inns click here.

Shares of Home Inns closed at $36.50 yesterday.

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