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On Thursday, Citi analysts maintained a Buy rating for Host Hotels & Resorts (NASDAQ:HST) with a steady price target of $21.00. The firm’s stance comes despite anticipating a conservative outlook from hotel REITs, including Host Hotels. The company has guided to a Revenue Per Available Room (RevPAR) growth of 1.5%, with its EBITDA forecast ranging from $1,590 million to $1,650 million—approximately 2% below the consensus at the midpoint. Additionally, the forecast for Funds From Operations (FFO) is roughly 5% lower than expected. With last twelve months EBITDA at $1.515 billion and a strong current ratio of 2.59, the company maintains solid financial fundamentals.
Host Hotels’ outlook for its Maui properties is particularly challenging, according to Citi analysts. Contributing factors to the cautious outlook include higher labor costs, which are surpassing already elevated expectations, and a slower recovery at the hurricane-damaged Don Cesar hotel in St. Petersburg, Florida. However, the anticipated negative impact is thought to be partially mitigated by a projected $9 million in business interruption insurance and $25 million in expected proceeds from condominium sales in the fourth quarter.
Citi’s analysis suggests that the report might be perceived as disappointing, potentially leading to a downward trend in forecast revisions. Despite this, the analysts argue that the risk/reward ratio for Host Hotels remains positively skewed. This perspective is bolstered by the company’s attractive balance sheet and considerable free cash flow. Trading at 10 times the estimated 2025 EBITDA and a P/E ratio of 16.76, Host Hotels is viewed by Citi as a favorable investment opportunity. For deeper insights into Host’s valuation and 6 additional exclusive ProTips, access the comprehensive research report available on InvestingPro.
In other recent news, Host Hotels & Resorts Inc. reported fourth-quarter earnings and revenue that exceeded analyst expectations. The company posted adjusted earnings per share of $0.15, surpassing the consensus estimate of $0.13. Revenue for the quarter reached $1.43 billion, beating expectations of $1.37 billion. Host Hotels & Resorts reported a 3.3% year-over-year increase in comparable hotel Total (EPA:TTEF) RevPAR for the fourth quarter, mainly due to improvements in food and beverage revenues from group business. The company also acquired $1.5 billion worth of hotel properties in 2024 across four locations. Additionally, Host Hotels & Resorts returned $844 million to shareholders through dividends and share repurchases. Looking ahead, the company anticipates 2025 comparable hotel Total RevPAR growth of 1.0% to 3.0% over 2024 levels, factoring in continued improvement in group business and steady leisure demand.
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