UPDATE: Canaccord Genuity Upgrades Ashford Hospitality Prime (AHP) to Buy

(Updated - September 1, 2015 10:17 AM EDT)

Canaccord Genuity upgraded Ashford Hospitality Prime (NYSE: AHP) from Hold to Buy with a price target of $21.00 (from $14.00), suggesting upside of 52%. The change follows news the company is exploring strategic alternatives.

Commenting on developments, analyst Ryan Meliker said, "We have long held the view that AHP trades at a material discount to NAV but until now had not seen a catalyst to resolve that discount and had not believed management was willing to sell. Our view on that dynamic has now changed as we believe the launch of a strategic review process should culminate in a transaction that offers AHP shareholders a value much closer to our current $24.76 NAV estimate. Thus, while the stock reacted favorably to the news (up 15% on Friday), we still see close to 50% upside from current levels."

"We believe the most likely resolution of the strategic review process is a management-led LBO in which management gets a private capital partner to take AHP private and keep the portfolio externally managed by AINC. This would make all parties happy, and we believe there are private equity players willing to structure a deal along these lines. This solution keeps the fee stream to AINC intact and management maintains control while also offering material upside to the current stock price to existing AHP shareholders," added the analyst.

For an analyst ratings summary and ratings history on Ashford Hospitality Prime click here. For more ratings news on Ashford Hospitality Prime click here.

Shares of Ashford Hospitality Prime closed at $13.83 yesterday.

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