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Investing.com - Raymond James upgraded RLJ Lodging Trust (NYSE:RLJ) from Market Perform to Strong Buy on Wednesday, setting a price target of $9.00, representing a 23% upside from the current price of $7.29.
The upgrade comes after several lodging REITs reported strong third-quarter 2025 results last week, which triggered a sector-wide rally that outperformed all other REIT sectors. Despite the upgrade, Raymond James acknowledged near-term headwinds in the fourth quarter, including a government shutdown, shorter booking windows, and macroeconomic uncertainty.InvestingPro data shows RLJ is currently trading at a price-to-book ratio of 0.6, supporting Raymond James’ valuation thesis. The stock offers an impressive 8.23% dividend yield, significantly above sector averages.
The firm expects EBITDA growth to resume across the lodging sector in 2026, partly due to easier comparisons with 2025’s weaker-than-expected performance. Multiple tailwinds are anticipated for 2026, including the World Cup, America 250 celebrations, favorable holiday calendar shifts, declining labor cost pressures, and limited new supply.
Raymond James cited RLJ’s "deeply discounted valuation" as a key factor in the upgrade, noting it trades at "one of the most compelling valuations among the group." The firm believes improving sector fundamentals will benefit all lodging REITs, including RLJ. This assessment aligns with InvestingPro analysis, which indicates RLJ is trading below its Fair Value, with an EV/EBITDA ratio of 10.85.
The upgrade reflects Raymond James’ increasingly bullish outlook on Lodging REITs overall, suggesting that the "rising tide will catch all boats" as the sector’s outlook improves for 2026. According to InvestingPro Tips, RLJ "trades at a low EBITDA valuation multiple" and "pays a significant dividend to shareholders" - factors that could make it attractive as the sector recovers. InvestingPro offers 8 more exclusive insights on RLJ Lodging Trust, along with comprehensive financial data and a detailed Pro Research Report available for subscribers.
In other recent news, RLJ Lodging Trust reported its third-quarter 2025 earnings, which aligned closely with market expectations. The company announced an earnings per share (EPS) of -$0.07, matching the forecasts set by analysts. RLJ Lodging Trust’s revenue for the quarter was $330 million, slightly exceeding the projected $325.57 million. These results highlight the company’s ability to meet financial projections. Despite the earnings meeting expectations, there was a minor decline in the stock during regular trading hours. The earnings call did not indicate any significant deviations from anticipated performance. Investors and analysts will likely continue to monitor RLJ Lodging Trust’s future earnings for further insights.
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