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On Monday, Raymond (NSE:RYMD) James adjusted its price target for Hilton Worldwide (NYSE:HLT) shares, reducing it to $275 from the previous target of $290. The firm retained its Outperform rating on the hospitality company’s stock. Currently trading at $256.44, Hilton shows strong momentum with a 25.5% return over the past year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with analysts’ targets ranging from $218 to $312. The revision comes after Hilton reported first-quarter earnings, which surpassed expectations for EBITDA and EPS. The company maintains impressive gross profit margins of 76.5% and generated $2.5 billion in EBITDA over the last twelve months. However, the company’s revenue per available room (RevPAR) reached only the lower end of its guidance for the quarter. InvestingPro data reveals 13 additional key insights about Hilton’s financial performance, available to subscribers.
Hilton’s latest financial disclosure indicated a downturn in full-year RevPAR and EBITDA projections, attributing it to a decline in demand, particularly in the leisure segment. The trend was evident with flat year-over-year short-term bookings in March, which persisted into April. Despite this, the group business segment showed resilience, with a 6% increase in RevPAR during the first quarter. Moreover, Hilton’s management noted minimal impact on the transient demand from small and medium-sized businesses.
The company’s management updated its full-year 2025 RevPAR growth forecast, now ranging between 0-2%. This adjustment reflects a slight worsening of conditions on the lower end and a potential improvement in the latter half of 2025 on the higher end. With revenue growth of 5.2% and an overall "GREAT" financial health score from InvestingPro, Hilton confirmed its net unit growth (NUG) expectations of 6-7%, with a year-over-year increase of 7% in its current pipeline. Discover comprehensive analysis and 1,400+ detailed Pro Research Reports by subscribing to InvestingPro.
The reassurance of growth prospects for the second half of 2025, coupled with the robust pipeline, has contributed to Hilton’s stock rebounding after a significant drop from its February highs. Year to date, Hilton’s shares have returned to positive territory. Raymond James anticipates that the stock will maintain its upward trajectory, buoyed by the improving outlook for the latter half of the year.
In other recent news, Hilton Worldwide Holdings Inc. reported its Q1 2025 earnings, exceeding analysts’ expectations with an adjusted EPS of $1.72, compared to the forecast of $1.62. However, the company’s revenue came in slightly below projections at $2.7 billion against the anticipated $2.73 billion. The company opened 186 hotels in the first quarter, marking a 20% increase year-over-year, and maintains a strong development pipeline with over 503,000 rooms. Hilton’s strategic focus on luxury and lifestyle categories continues to drive its competitive edge, contributing to a 6% year-over-year increase in adjusted EBITDA to $795 million.
In other developments, Jefferies analyst David Katz upgraded Hilton’s stock rating from Hold to Buy, raising the price target from $228 to $296. Katz expressed confidence in Hilton’s business model, noting its resilience and potential for long-term growth despite economic uncertainties. The analyst highlighted the shift from cyclical revenue per available room to more durable mid-single-digit net unit growth as a core earnings growth driver.
Hilton projects full-year adjusted EPS to range between $7.76 and $7.94, with expected adjusted EBITDA between $3.65 billion and $3.71 billion. The company anticipates flat to 2% growth in full-year revenue per available room and plans to maintain a 6-7% net unit growth in 2025. CEO Chris Messetta expressed confidence in Hilton’s strategic position, while CFO Kevin Jacobs emphasized the company’s strength in conversions, particularly in challenging environments.
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