Hyatt Hotels (H – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Stephen Grambling from Morgan Stanley maintained a Hold rating on the stock and has a $132.00 price target.
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Stephen Grambling has given his Hold rating due to a combination of factors related to Hyatt’s recent strategic moves. The decision to sell Playa’s owned real estate portfolio, which includes 15 all-inclusive resorts, is seen as a de-risking strategy that reduces operating leverage volatility. This transaction allows Hyatt to focus on management agreements, which aligns with their all-inclusive management fee structure, and is expected to generate a stable EBITDA in the future.
From a financial perspective, the sale’s implied EBITDA multiple is favorable compared to Hyatt’s fee segment, suggesting a prudent financial decision. However, uncertainties remain regarding the terms of the preferred equity retained by Hyatt and potential breakage costs or tax implications associated with the asset sale. These factors contribute to a cautious outlook, justifying the Hold rating as investors assess the long-term impact of these strategic changes.
Grambling covers the Consumer Cyclical sector, focusing on stocks such as Marriott International, DraftKings, and Boyd Gaming. According to TipRanks, Grambling has an average return of 5.7% and a 62.14% success rate on recommended stocks.
In another report released yesterday, Stifel Nicolaus also maintained a Hold rating on the stock with a $149.00 price target.