Citi raises Playa Hotels & Resorts price target to $13, keeps neutral

On Wednesday, Citi analysts updated their valuation of Playa Hotels & Resorts (NASDAQ:PLYA) shares, increasing the price target from $10.00 to $13.00 while maintaining a neutral stance on the stock. The new price target implies a valuation of approximately 10 times the expected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $244 million. This is a notable increase from the 2022-2024 average multiple of 8.2 times, or just over $400,000 per key (a measure of value per hotel room).

The revision comes as Playa Hotels & Resorts is engaged in exclusive talks with Hyatt regarding a potential acquisition. Hyatt has recently extended its exclusivity period for negotiating with Playa until February 10, 2025, which was initially set to conclude on February 3, 2025. Citi’s analysis suggests that the acquisition could be settled for a price ranging between $12.50 and $13.00 per share. This estimated purchase price would represent a 30-35% premium over the stock’s price prior to the December 23, 2024, announcement of the negotiations.

Citi’s assessment indicates that if Hyatt successfully acquires Playa, the company is likely to divest some of its holdings in line with its strategy to maintain a lighter asset portfolio. Hyatt’s approach typically involves less direct ownership of real estate, preferring to sell certain assets over time. For deeper insights into Playa’s financial position and valuation metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

The price target increase reflects Citi’s expectation of the potential acquisition’s premium and the strategic moves that may follow. Playa Hotels & Resorts’ stock price could see changes as the market responds to the ongoing negotiations and the possible outcomes of Hyatt’s strategic decisions post-acquisition.

In other recent news, Hyatt Hotels (NYSE:H) Corporation has been making significant strides in its growth and strategic plans. Bernstein analysts, led by Richard Clarke, maintained a positive outlook on Hyatt, reiterating an Outperform rating and a $188 price target. The team expressed optimism about Hyatt’s prospects for 2025 and beyond, emphasizing the company’s strong brand recognition and leadership in revenue per available room (RevPAR) and net unit growth (NUG).

Mizuho (NYSE:MFG) Securities also showed confidence in Hyatt by raising the company’s price target to $207 from $198, while sustaining an Outperform rating. They anticipate a robust Net Unit Growth for Hyatt, potential earnings boost from upcoming credit card negotiations, and improvement in Revenue Per Available Room (RevPAR).

Hyatt has also formed a strategic joint venture with Grupo Piñero, a Spanish tourism group, to manage Bahia Principe Hotels & Resorts properties and own the brand. The partnership aims to provide more all-inclusive travel opportunities for guests and World of Hyatt members.

Additionally, Hyatt Hotels entered exclusive negotiations with Playa Hotels & Resorts N.V. as part of potential strategic moves for the resort operator valued at $1.2 billion. The two companies have a history of collaboration, with Playa operating resorts under the Hyatt Ziva and Hyatt Zilara brands.

Finally, Baird maintained a Neutral rating on Hyatt with a consistent price target of $158.00. The firm acknowledged Hyatt’s recent long-term licensing agreement with The Venetian Resort Las Vegas as an incrementally positive development, expected to increase Hyatt’s net unit growth by over 200 basis points. These are the latest developments for Hyatt Hotels Corporation.

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