Sunstone Hotel upgraded to Outperform from In Line at Evercore ISI

Evercore ISI upgraded Sunstone Hotel (SHO) to Outperform from In Line with an unchanged price target of $10. Sunstone has underperformed peers year-to-date as construction delays in Miami caused it to miss the Q1 peak season, while a slower recovery in Maui and more modest ramp in San Diego have impacted the FY25 outlook, the analyst tells investors. The company “appropriately reset” expectations and takeout speculation of “bite-sized” portfolios like Sunstone’s and DiamondRock (DRH) that was baked into the stock last year has faded. However, major renovation projects are now complete and should provide meaningful tailwinds starting in the second half, says the analyst, who believes year-over-year earnings growth through FY26 following this quarter’s reset should outpace peers.