Nomura Securities Downgrades Host Hotels (HST) and Hyatt Hotels (H) to Neutral
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Nomura Securities downgraded Host Hotels (NYSE: HST) from Buy to Neutral with a price target of $16.00 (from $19.00). Hyatt Hotels (NYSE: H) was downgraded from Buy to Neutral with a price target of $54 (from $59). Analyst Harry C. Curtis said he was downgrading due to "asset-heavy business models."
"Our lower outlook for 2.7% RevPAR growth in 2017 should drive 7-8% EBITDA and FCF growth for Buy-rated asset-light business models. From current prices, we expect total returns of 17-19% for HLT and MAR, which assumes zero multiple expansion. For asset-heavy(ier) models like HST and H, 2.7% RevPAR generates little EBITDA growth due to cost pressures. Their multiples are unlikely to expand this late in the cycle, so total return is limited to ~6%, thus the Neutral ratings," said Curtis.
Shares of Host Hotels closed at $15.54 yesterday.
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