UPDATE: Morgan Stanley Downgrades Choice Hotels (CHH) to Underweight
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Morgan Stanley analyst Thomas Allen downgraded Choice Hotels (NYSE: CHH) from Equalweight to Underweight with a price target of $136.00 (from $132.00).
The analyst comments "CHH was the strongest performing Lodging stock in our coverage in 2021, up 46%, benefitting from having the highest leisure mix of the group. CHH is currently trading at 21x/19.5x our 2023e/2024e EBITDA, meaningfully above its 2017-19 average of 14.5x and peak of 17x. Despite growing net units slower than peers pre-COVID, we do not expect CHH even to return to its pre-COVID net unit growth in our forecast period (through 2025), unlike peers, as it deals with underperforming Quality Inns. Additionally, CHH's greater exposure to the leisure segment and to lower-end chainscales has led to outperformance throughout the pandemic, which means that it is at risk of seeing declining RevPAR starting in mid-2022."
Shares of Choice Hotels closed at $152.27 yesterday.
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