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On Tuesday, Jefferies analyst David Katz updated the firm’s outlook on Park Hotels & Resorts (NYSE:PK), increasing the price target to $11 from the previous $10, while the Hold rating on the company’s shares remains unchanged. Katz’s revised price target is based on forward-looking financial multiples, taking into account the fiscal years 2025 and 2026.
The new valuation reflects multiples of 8.5 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), up from 8 times, 7 times price to adjusted funds from operations (P/AFFO) from the former 6 times, and 8.75 times price to free cash flow to equity (P/FCFE) from the previous 8 times. These figures are also aligned with a five-year discounted cash flow (DCF) analysis. According to InvestingPro data, the company currently trades at an EV/EBITDA multiple of 11.13x and offers a substantial 13.79% dividend yield, making it an interesting consideration for income-focused investors. Get access to 12 additional exclusive ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.
Katz noted that the valuation of Park Hotels & Resorts is facing challenges due to a slower-than-anticipated recovery at the Hawaiian Village and a deceleration in group bookings, which may be attributed to uncertainties in the broader economic environment. Despite these pressures, the company is actively pursuing capital allocation strategies, which include a goal for asset sales, a strong lineup of capital expenditure (CapEx) projects, and positive developments at recently renovated properties.
The analyst underscored that while current market conditions have placed some strain on the company’s valuation, the long-term outlook is bolstered by strategic initiatives. Park Hotels & Resorts is focusing on asset management and investment to drive future growth and enhance shareholder value.
In summary, Jefferies’ updated stance on Park Hotels & Resorts signals a recognition of both the near-term challenges the company faces and the potential benefits from its strategic capital allocation and property improvements. The Hold rating suggests that Jefferies advises investors to maintain their current positions in the stock at this time.
In other recent news, Park Hotels & Resorts Inc. reported its Q1 2025 earnings, missing the expected earnings per share (EPS) but slightly exceeding revenue forecasts. The company reported an EPS of -$0.29, significantly below the anticipated $0.08, while revenue reached $630 million, surpassing the projected $614.12 million. Despite the revenue beat, the earnings miss has raised concerns among investors. Park Hotels continues to invest in capital improvements, totaling $80 million in the first quarter, and has revised its full-year RevPAR forecast to a range of -1% to +2%. The company anticipates adjusted EBITDA between $590 million and $650 million, alongside adjusted FFO per share of $1.79 to $2.09. Analysts from firms such as Evercore ISI have noted these developments, highlighting the company’s strategic focus amid market uncertainties. Additionally, Park Hotels remains active in asset sales, aiming to sell $300 million to $400 million worth of non-core hotels this year. The company also announced a $100 million renovation project for the Royal Palm South Beach, Miami, expected to enhance guest experience and potentially double the hotel’s EBITDA once stabilized.
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