Starwood (HOT) Q4 at Risk - Jefferies

Jefferies analyst, Ian Rennardson, thinks there is risk that Starwood (NYSE: HOT) will come in at the bottom end of the company guidance. Despite the planned takeover by Marriott, Starwood shares have fallen almost 30% from their peak last April, but consensus 2016e EPS is down only 3% at $3.26 since then. The analyst thinks this number is under pressure. Cutting PT to $60 from $73; no change to Hold rating.

STR data shows US RevPAR grew by 4.8% in Q4, with a slowing monthly trend (October 6.5%, November 4.3% and December 3.2%). Additionally, the independent un-branded sector (representing about 30% of market volume) grew by 5.9%, implying c 4.4% growth in the branded sector.

With its Q3 2015 results, Starwood guided to constant currency, same-store system-wide RevPAR growth of 4 -6%. We think given the continuing slowdown in US RevPAR growth and elsewhere in the world, the risk is that this guidance is lowered when the company gives updated guidance this week. We believe our bottom of the range 3% estimate is a more realistic scenario. preliminary STR RevPAR data for January 2016 shows growth of 2% at the mid-point.

For an analyst ratings summary and ratings history on Starwood Hotels & Resorts click here. For more ratings news on Starwood Hotels & Resorts click here.

Shares of Starwood Hotels & Resorts closed at $64.01 yesterday.

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