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Hyatt’s Strategic Asset Sale Enhances Market Share and Secures Favorable Valuation

Hyatt’s Strategic Asset Sale Enhances Market Share and Secures Favorable Valuation

Bernstein analyst Richard Clarke has maintained their bullish stance on H stock, giving a Buy rating yesterday.

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Richard Clarke’s rating is based on Hyatt’s strategic decision to sell the entirety of Playa’s real estate portfolio for $2 billion, which is expected to close by the end of 2025. This transaction allows Hyatt to maintain management agreements for most of the properties, enhancing its market share in the all-inclusive segment across Mexico, the Dominican Republic, and Jamaica. By retaining $200 million in preferred equity, Hyatt effectively reduces the net purchase price of Playa to $555 million, leading to an anticipated EBITDA of $60-65 million by 2027, which represents a favorable multiple compared to current market valuations.
Additionally, the sale addresses investor concerns about the asset-heavy nature of the Playa acquisition and the associated debt, especially during uncertain times. The deal is seen as a positive move, enabling Hyatt to expand its presence in the LATAM/Caribbean region while securing an asset-light fee stream at a discount. Despite some concerns about capital allocation, this transaction is viewed as beneficial for shareholders, with further opportunities on the horizon such as property disposals and a new credit card deal, supporting the Outperform rating.

According to TipRanks, Clarke is a 3-star analyst with an average return of 2.9% and a 49.64% success rate. Clarke covers the Consumer Cyclical sector, focusing on stocks such as Airbnb, Hyatt Hotels, and Marriott International.

In another report released yesterday, Bank of America Securities also reiterated a Buy rating on the stock with a $150.00 price target.

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