Barclays Maintains an 'Underweight' on Choice Hotels (CHH); Estimate Update

Barclays maintains an 'Underweight' on Choice Hotels (NYSE: CHH), PT lowered from $38 to $37.

Barclays analyst says, "We are updating our Choice model following the 4/28 1Q11 results...As a reminder, Choice reported adjusted 1Q11 EPS of $0.28 (including a $0.02 one-time charge and discrete tax benefit), slightly above our estimate and consensus of $0.25. RevPAR growth of 5.5% was above our estimate and guidance of +5.0%. Unit growth of 1.3% was below our +2.1% estimate, driven by a slower-than-expected acceleration in conversions. The effective royalty rate of 4.35% was in line with our estimate and up 3bps from 1Q10. Choice did not repurchase any shares in the quarter."

"Our 2011E EPS goes to $1.73 from $1.75 based on RevPAR growth of 4%
(unchanged), flat unit growth (from +1.1%), and flat royalty rate growth (from +3 bps). Our 2012E EPS goes to $1.85 from $1.95 based on RevPAR growth of 4% (unchanged), 1.0% unit growth (from +1.8%), and royalty rate +3 bps (from +5 bps)."

For more ratings news on Choice Hotels click here and for the rating history of Choice Hotels click here.

Shares of Choice Hotels closed at $35.97 yesterday.

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