Host Hotels May Accommodate Investors With Luxurious Earnings, Dividend Increases

Shares of Host Hotels and Resorts Inc HST are expected to benefit from higher earnings, share repurchases and dividend hikes in the coming quarters, Argus’s Jacob Kilstein said in a report. He maintained a Buy rating on the company, while raising the price target from $19 to $21.

Host Hotels had reported its 2Q16 adjusted FFO at $0.49 per share, in-line with expectations and up 7 percent from 2Q15. “The higher FFO reflected operational improvement, lower interest expense, and the impact of share repurchases,” analyst Kilstein mentioned.

Revenue came in at $1.46 billion, marginally short of the consensus expectation of $1.47 billion and up 1 percent y/y. Management reduced its 2016 adjusted FFO guidance from $1.65-$1.69 per share to $1.63-$1.67 per share.

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Returns To Shareholders

Host Hotels announced plans to sell less than $1 billion of property assets this year. The company would instead use the proceeds to issue a special dividend, repurchase shares, and pay off debt, Kilstein noted.

The analyst added that the company has $162 million remaining on its current buyback authorization, which began in October 2015 and that the special dividend being planned would come from $800 million in hotel sale proceeds by the end of the year.

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