Wells Fargo Upgrades Gaylord Entertainment (GET) to Market Perform; Fairly Valued

November 4, 2009 8:31 AM EST

Wells Fargo upgrades Gaylord Entertainment (NYSE: GET) from Underperform to Market Perform. Valuation range lowered to $16-$18 from $18-$20.

Wells analyst says, "We believe the shares are trading at 10x 2010E CCF vs 16x for the hotel REITs and 12x for the C-corps. Group business growth prospects remain uncertain but much of the risk to 2010 is priced into the shares in our view. Group pricing could remain under pressure beyond 2010 (Las Vegas, group rates exceed transient rates) but could take several quarters to unfold. Thus far, rates booked in 2009 for 2011 are higher than those booked in 2009 for 2010. Raising our 2009E CCF to $195.4MM, from $184.2MM, and 2010E CCF to $179.3MM, from $171.2MM. Valuation range is $16-$18, from $18-$20; our valuation mult."

"In an uncertain environment, we believe Gaylord should benefit from the contractual nature of its business and its focus on short term bookings. The hotels typically enter any given year with 60% occupancy on the books (~51% in 2009) and business is booked 2-3 years in advance. However, at this time, we believe the shares are fairly valued."

To see more analyst ratings on GET Click Here.

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