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Investing.com - TD Cowen has raised its price target on Hilton Worldwide (NYSE:HLT) to $291.00 from $256.00 while maintaining a Buy rating on the hotel chain’s stock. The stock, currently trading at $272.69 with a market capitalization of $64.87 billion, is approaching its 52-week high of $279.46. InvestingPro analysis suggests the stock is slightly overvalued at current levels.
The firm acknowledged recent sluggish hotel data points, with June U.S. RevPAR (Revenue Per Available Room) down approximately 1% following flat performance in April-May, and July starting weaker. International markets have also been soft over the past six weeks, though they showed strength in April-May. Despite these challenges, Hilton maintains impressive gross profit margins of 76.51% and has achieved revenue growth of 5.19% over the last twelve months.
TD Cowen noted that pressure on U.S. hotel performance continues due to declining inbound travel. U.S. hotel construction starts have also begun trending downward, according to data from STR.
Despite these soft hotel results, the firm raised its price target based on "better overall macro" conditions. The analyst report suggested that with weak RevPAR widely expected, Hilton might echo recent comments from Delta Air Lines (NYSE:DAL) and United Airlines about improving quarter-to-date trends.
TD Cowen also pointed out that any normalization of the U.S. inbound-outbound travel disparity could help U.S. RevPAR rebound somewhat next year.
In other recent news, Hilton Worldwide Holdings Inc. has made significant financial moves by upsizing its debt offering to $1 billion, doubling the initial plan of $500 million. The company’s subsidiary, Hilton Domestic Operating Company Inc., will use $515 million of the proceeds to repay existing debt under its senior secured revolving credit facility. The remaining funds are allocated for general corporate purposes. JPMorgan has initiated coverage on Hilton with an overweight rating, citing the company’s strong EBITDA growth potential and robust free cash flow. The firm set a price target of $282, highlighting Hilton’s industry-leading net unit growth as a key driver of its valuation. Jefferies has maintained a Buy rating for Hilton, with a price target of $296, due to the company’s quality business model and management. In contrast, Raymond (NSE:RYMD) James has adjusted its price target to $275 from $290, noting that Hilton’s first-quarter earnings exceeded expectations but RevPAR was at the lower end of guidance. Hilton’s management has updated its full-year RevPAR growth forecast to 0-2%, while confirming net unit growth expectations of 6-7%.
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