Lodging Sector, Stocks Downgraded at MKM; Analyst Favors Leisure Focused Names (MTN) (MAR) (STAY) (HLT) (BEL) (MHGC) (H) (CHH)

MKM downgraded the lodging sector and stocks due to a more cautious outlook for the economy, though analyst favor leisure focused names like Vail Resorts (NYSE: MTN), which was upgraded to Buy.

Marriott (NASDAQ: MAR) and Extended Stay America (NYSE: STAY) were lowered to Neutral from Buy and Hilton Worldwide (NYSE: HLT), Belmond Ltd. (NYSE: BEL), Morgans Hotel Group (NASDAQ: MHGC), Hyatt Hotels (NYSE: H), and Choice Hotels (NYSE: CHH) were cut to Sell.

Analyst Christopher Agnew said, "(1) We are more cautious on the business cycle in 2016 and see downside to estimates over the next 12 months, (2) Trailing 12 months ADR growth peaked in 4Q15, after an underwhelming year in 2015, and historically this has called time in our view on cyclical stock out-performance, (3) Although multiples already likely reflect what we believe to be a disappointing 4Q, prior cycles indicate there could be further downside to multiples if our cautious view on the economy is correct, (4) Leisure travel was strong in 2015, corporate transient demand was weak; we believe these trends will continue into 2016 and therefore we favor leisure focused stocks."

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