UPDATE: FBR Capital Downgrades Hospitality Properties Trust (HPT) to Market Perform
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(Updated - August 10, 2016 2:35 PM EDT)
FBR Capital downgraded Hospitality Properties Trust (NASDAQ: HPT) from Outperform to Market Perform with a price target of $32 (from $31). The change follows the release of Q2 results. Analyst Bryan Maher noted that shares are trading near his price target.
The analyst explained, "HPT continued to deliver sector outperformance in 2Q16, as RevPAR of 4.9% handily beat the industry of 3.5%. This marked the 14th consecutive quarter of RevPAR outperformance over the industry for HPT. This outperformance stems, primarily, from a nearly $1 billion hotel reinvestment program that ran from 2012–2015. We expect another 12 to 15 months of potential sector outperformance from the long tail of this investment. In addition, the outperformance of HPT and a handful of other predominantly upscale and upper-upscale select-service and extended-stay lodging REITs, relative to the industry on the whole, throws water on the idea that all lodging REITs (and C-corps) suffered from softness in corporate transient in 2Q16. What it tells us is that corporate transient, while maybe curtailing travel a little, is clearly trading down a notch to more attractively priced—yet very good quality —branded select-service hotels versus staying at pricier, urban full-service hotels. However, HPT is up 21.7% YTD, compared to 6.7% for the S&P 500 and 8.0% for lodging REITs. Having approached our new target price of $32 (from $31), we are compelled to ratchet back out rating to Market Perform (from Outperform) at this time."
Shares of Hospitality Properties Trust closed at $31.89 yesterday.
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