Hilton's Q4 Outperformance & FY23 Guidance Prompt 10% Price Target Boost By This Analyst

Raymond James analyst William Crow reiterated Outperform rating on the shares of Hilton Worldwide Holdings Inc HLT and raised the price target from $150 to $165.
The company reported better-than-expected Q4 results and guidance, calling for 4-8% RevPAR growth
Despite the near-term macro headwinds, management is not seeing any signs of weakening fundamentals and believes that rising demand, along with the historically low industry supply growth, should drive strong pricing.
Business transient demand continued to improve during 4Q, with management noting resiliency/growth among small and medium-sized businesses, added the analyst.
Management expects group business trends to continue accelerating this year, with group pace YTD up 25% y/y and near 2019 levels, with tentative bookings up 20% y/y, pricing up in the low single-digits, and January lead volumes at an all-time high.
Hilton already has 200 conversions in various stages of negotiation since announcing its new premium economy brand, Spark, the analyst remarked.
Also Read: Hilton Hotels Launches New Brand 'Spark By Hilton'
Management suggested that 98% of its Spark-conversion pipeline comes from non-Hilton brands.
Management forecasted a flattening or slight decrease in pricing power in 2H and noted that better-than-expected occupancy in 2H could provide an upside to initial 2023 guidance.
The analyst said the unit growth and share repurchase stories remain very much intact.
The analyst prefers HLT to its c-corp peers here, but we also see more upside to the lodging REITs over the near term.
Longer-term, however, the analyst continues to prefer the asset-light, fee-driven, capital return-focused brand companies.
Price Action: HLT shares are trading higher by 1.60% at $149.52 on the last check Monday.

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