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On Monday, Bernstein SocGen Group made adjustments to its outlook on Hyatt Hotels Corporation (NYSE:H), reducing the price target to $173 from the previous $188 while keeping an Outperform rating on the stock. The revision follows Hyatt's recent performance, with the stock currently trading at $142.75, having declined 12.1% over the past week and 9.1% year-to-date. According to InvestingPro analysis, the stock appears to be fairly valued based on its proprietary Fair Value model.
According to the analyst, the lower fourth-quarter EBITDA of $749 million and the full-year guidance falling below consensus could be attributed to a larger-than-expected impact from asset disposals and underperformance in the non-core Distribution business. The analyst also highlighted a conservative approach to the company's revenue per available room (RevPAR) and room growth projections. InvestingPro data reveals that four analysts have recently revised their earnings downward for the upcoming period, suggesting continued near-term challenges.
The analyst expressed concern over Hyatt's recent trend of missing financial targets, contrasting with competitors Hilton (HLT) and Marriott (MAR) who have consistently beaten expectations. Furthermore, Hyatt's year-over-year free cash flow dropped to a third below the guidance provided at the company's Capital Markets Day (CMD) in 2023, and the absence of new buyback announcements was noted as a disappointment.
Despite these issues, the analyst believes Hyatt's valuation reflects these concerns, trading at less than 13 times its projected 2026 EBITDA compared to Hilton's and Marriott's 17 and 19 times, respectively. The company maintains a "GOOD" Financial Health score on InvestingPro, which offers 10+ additional exclusive insights and comprehensive valuation metrics through its Pro Research Report. The analyst remains optimistic about Hyatt's potential to reach its 'asset-light nirvana' and anticipates possible upgrades to room growth and RevPAR guidance throughout the year.
The report also reiterated the presence of catalysts that could positively influence Hyatt's performance, including credit card partnerships, asset disposals, and the benefits of reopening economies. While acknowledging a reduction in investor confidence, the analyst maintains the Outperform rating but with a lowered price target, suggesting a continued belief in Hyatt's long-term prospects.
In other recent news, Hyatt Hotels Corporation reported fourth-quarter earnings that fell short of analyst expectations, with adjusted earnings per share of $0.42, a significant miss from the consensus estimate of $0.79. Revenue for the quarter was $1.72 billion. Furthermore, the company announced an agreement to acquire Playa Hotels & Resorts for approximately $2.6 billion, including debt.
These developments have led to adjustments in the price targets set by analysts. Jefferies analyst David Katz reduced the price target for Hyatt to $161 from $176, maintaining a Hold rating. Katz cited the company's active period of asset sales and acquisitions as potential factors affecting its growth trajectory. Similarly, Barclays (LON:BARC) analyst Brandt Montour lowered the price target from $162 to $151, keeping an Equalweight rating, following Hyatt's less promising outlook for fiscal year 2025.
These are recent developments for Hyatt, which is in the midst of reshaping its portfolio through strategic sales of assets and targeted acquisitions. As Hyatt continues to navigate this transitional phase, investors and analysts will likely monitor the effectiveness of Hyatt's strategy and its impact on the company's financial performance.
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