Susquehanna Downgrades Host Hotels & Resorts (HST) to Neutral
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Susquehanna downgrades Host Hotels & Resorts (NYSE: HST) from Positive to Neutral.
The firm said, "Similar to Marriott last week, HST put up a respectable 2Q number, but dramatically lowered expectations for the balance of the year, and did not give investors much hope that things would get better in 2009. Unlike Marriott, Host's stock did not tank after it threw in the kitchen sink. While the nice tailwind of a strong tape helped HST's stock end the day green, we suspect things are not going to get a whole lot better than this anytime soon given the daunting challenges facing the sector."
The firm acknowledges that downgrade would have been more useful 10 points ago, and that the market currently values HST at just over half of replacement cost. However, they said, "in our view, year-over-year declines in earnings and a higher likelihood of downward rather than upward earnings revisions (even from these reduced levels) is not a recipe for the multiple expansion that is needed to drive the shares meaningfully higher from these levels."
Positively, HST reiterated its commitment to its dividend, which has an 8% yield. Also, the company continues to buy back shares, which the firm believes is presently the highest and best use of its capital.
Host Hotels & Resorts, Inc. is a publicly owned real estate investment trust (REIT). The firm primarily engages in the ownership and operation of hotel properties.
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