Jones Trading Downgrades LuxUrban Hotels Inc. (LUXH) to Hold

Jones Trading analyst Matthew Erdner downgraded LuxUrban Hotels Inc. (NASDAQ: LUXH) from Buy to Hold.

The analyst comments "We downgrade our rating to Hold and remove our price target on LUXH shares. After the close, LUXH reported earnings and announced that their franchise agreement with Wyndham (WH - Not Covered) had been terminated as of May 6. The company is currently in the process of de-platforming its properties from Wyndham's systems and is moving each of its hotel listings back under full company control. This process is expected to be completed by the end of May. We believe this will cause a near-term drag on earnings due to a partnership consideration expense of $2.7mm in 1Q24 ($0.05/share) and additional expenses going forward due to the agreement termination. As of March 31, LUXH had 13 properties (14 at 4Q23) with 1,341 units available for rent with a weighted average lease term of 15.2 years and 19.5 years including extension options. The company reported adjusted EBITDA of $2.5mm, missing our estimate of $5.3mm and the consensus estimate of $6.4mm, respectively. LUXH reported 1Q24 EPS of ($0.35), missing our estimate of ($0.11), due to the termination of the Wyndham agreement and higher than expected expenses. Due to the loss of the agreement, we now think it is unlikely LUXH will meet their goal of being operationally cash flow positive in 2H24. We believe current risks outweigh rewards as we look for LUXH to improve working capital and continue to work through operational changes within the current portfolio."

For an analyst ratings summary and ratings history on LuxUrban Hotels Inc. click here. For more ratings news on LuxUrban Hotels Inc. click here.

Shares of LuxUrban Hotels Inc. closed at $0.54 yesterday.

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