Why Longbow Research Is Bullish On 5 Hotel Stocks

Longbow Research is out bullish on a host of hotel stocks. 

Choice Hotels 

Analyst Alton Stump initiated coverage of Choice Hotels International Inc CHH with a Buy rating and $95 price target in a Friday note. 

Choice Hotels was the right pick given its "solid" revenue per available room growth profile, potential for net room count acceleration and a favorable macroeconomic landscape, Stump said. The stock deserves to trade at least in-line with its own historical multiples, he said. (See the analyst's track record here.)

“CHH has significant exposure to leisure transient demand, which is benefiting from retiring baby boomers and a growing base of millennials that are traveling more often than prior generations." 

Choice Hotels could repurchase as much as 20 percent of its existing share base over the next 18 months, Stump said. 

Hilton Hotels 

Stump had a similar take on Hilton Hotels Corporation HLT and said its attractive fundamentals could get even better. The analyst initiated coverage with a Buy rating and $96 price target.

Hyatt Hotels 

Stump started coverage of Hyatt Hotels Corporation H with a Buy rating and $99 price target, arguing that the company deserves to trade at a premium versus the historical averages of peers.

Hyatt could repurchase nearly 30 percent of its existing share base by the end of 2019, the analyst said. 

“Since H is a predominantly franchised or managed operator with manageable capital spending requirements, we believe there is room for the company to add more leverage to its balance sheet,” he said.

Marriott International 

Stump initiated coverage of Marriott International Inc MAR with a Buy rating and $156 price target on the world’s largest hotel player.

“Higher leisure demand, an improved corporate travel spending environment and Marriott’s rapidly expanding loyalty member base were the key drivers behind the recent RevPAR acceleration, and we expect these favorable trends to continue into the foreseeable future,” the analyst said. 

Wyndham Hotels 

Longbow initiated coverage of Wyndham Hotels & Resorts Inc WH with a Buy rating and $77 price target.

With approximately one-half of the domestic economy segment represented by independent chains, Stump said most or all of them could benefit from converting to Wyndham’s umbrella and lessening exposure to OTA booking fees. 

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