Evercore ISI bullish on Ryman Hospitality stock with new Outperform rating

On Thursday, Evercore ISI initiated coverage on Ryman Hospitality Properties (NYSE:RHP), a real estate investment trust (REIT) specializing in large, convention-center style hotels, with an Outperform rating and a price target of $135.00. According to InvestingPro analysis, RHP currently appears undervalued, with the stock showing a "GREAT" financial health score.

The company's shares have recently experienced a significant 9.7% decline over the past week, potentially presenting an attractive entry point for investors. The firm highlighted Ryman's position as the second-largest lodging REIT by market capitalization and its ownership of a diversified entertainment platform, which includes the Opry Entertainment Group.

The Opry Entertainment Group, featuring iconic venues such as the Ryman auditorium and the Grand Ole Opry, offers the company additional revenue streams beyond its hotel operations. This diversification has contributed to impressive revenue growth of 12.6% over the last twelve months, as reported by InvestingPro. Ryman Hospitality's portfolio includes six core hotels, each boasting over 1,000 rooms and more than 150,000 square feet of meeting space, catering primarily to the events and conference industry.

Evercore ISI pointed out that Ryman's hotel portfolio is distinctive in the industry, with approximately 75% of room nights stemming from group segments, in contrast to the industry average of around 30%. This focus on group bookings provides Ryman with longer-term contractual visibility and a targeted sales approach, leveraging Marriott's dedicated salesforce for group events.

The analyst noted that Ryman's strategy of retaining and rotating large groups leads to significant recurring revenue, with 69% of room nights in 2023 expected to be from repeat groups. This business model offers Ryman a stable income flow and positions it favorably within the lodging REIT sector. The new price target reflects the analyst's confidence in Ryman's unique market position and its potential for revenue generation through its hotel and entertainment assets.

The company currently offers an attractive 4.4% dividend yield and has maintained dividend growth for three consecutive years. For deeper insights into RHP's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.

In other recent news, Ryman Hospitality Properties reported record consolidated total revenue of $550 million in the third quarter of 2024, a 4.1% increase year-over-year. The company's adjusted EBITDAre also rose to $175 million, up 2.3% from the previous year, primarily due to strong performance in both the hospitality and entertainment segments. Amid these developments, Ryman Hospitality revised its 2024 guidance, adjusting RevPAR growth and EBITDAre ranges due to market softness and construction disruptions.

On the analyst front, JPMorgan downgraded Ryman Hospitality Properties from Neutral to Underweight, maintaining its year-end 2025 price target at $100.00. The firm cited an unattractive and unsustainable valuation multiple for the downgrade. In contrast, BMO Capital Markets initiated coverage on Ryman Hospitality with an Outperform rating, setting a price target of $133.00. BMO highlighted the company's distinct advantages and potential for industry-leading returns. Truist Securities also increased its price target for Ryman Hospitality to $136.00, maintaining a Buy rating on the stock.

In other company news, Ryman Hospitality is exploring a potential expansion at the Gaylord Rockies, targeting 450 additional rooms. This move reflects the company's robust prospects for the upcoming years.

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