Jefferies cuts Host Hotels target to $20, maintains Buy rating

On Friday, Jefferies analyst David Katz adjusted the price target for Host Hotels & Resorts Inc. (NASDAQ:HST) shares, bringing it down to $20 from the previous $21, while reiterating a Buy rating on the stock. Katz’s decision follows Host Hotels’ recent financial performance, which included a quarter that surpassed expectations and a cautious outlook.

In his remarks, Katz highlighted the company’s potential for growth, which is anticipated to be fueled by recent acquisitions and ongoing capital projects. He also noted the early signs of recovery in the Maui market and pointed out the strength of Host Hotels’ balance sheet, which InvestingPro data confirms with a healthy current ratio of 1.68 and liquid assets exceeding short-term obligations. According to Katz, these factors are likely to contribute to the company’s future expansion. InvestingPro has identified several additional strengths, with 6 more exclusive ProTips available to subscribers.

Despite the positive outlook, Katz acknowledged the potential challenges ahead, specifically the cost pressures expected in 2025 that might temporarily impact the stock’s performance. Nevertheless, he believes that the current valuation of the shares, trading at 9.6 times the estimated 2025 EBITDA, suggests there is room for an upward price movement. This view is supported by the company’s solid financial performance, with revenues of $5.69 billion in the last twelve months and a healthy gross profit margin of 29.12%.

The analyst’s reaffirmation of the Buy rating indicates confidence in the company’s ability to navigate the near-term headwinds and capitalize on growth opportunities. Katz’s statement underscores the balance between recognizing the immediate concerns and the long-term prospects for Host Hotels.

Investors and market watchers will likely monitor the stock’s performance closely, considering both the revised price target and the ongoing strategic initiatives that could influence Host Hotels’ trajectory in the hospitality industry.

In other recent news, Host Hotels & Resorts 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, while revenue reached $1.43 billion, beating the anticipated $1.37 billion. Comparable hotel Total (EPA:TTEF) Revenue Per Available Room (RevPAR) increased by 3.3% year-over-year, driven by improvements in food and beverage revenues from group business. For the full year of 2024, comparable hotel Total RevPAR grew by 2.1%, and the company acquired $1.5 billion in hotel properties across four locations. Host Hotels also returned $844 million to shareholders through dividends and share repurchases.

Looking ahead, Host Hotels & Resorts expects 2025 comparable hotel Total RevPAR growth of 1.0% to 3.0% over 2024 levels, assuming continued improvement in group business and steady leisure demand. Despite a conservative outlook from hotel REITs, Citi analysts maintained a Buy rating for Host Hotels with a $21 price target. Challenges include higher labor costs and a slower recovery at the hurricane-damaged Don Cesar hotel in Florida. However, potential negative impacts may be mitigated by anticipated business interruption insurance and proceeds from condominium sales. Citi analysts suggest that the risk/reward ratio remains positively skewed due to Host Hotels’ attractive balance sheet and considerable free cash flow.

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