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On Monday, Truist Securities adjusted its expectations for RLJ Lodging Trust (NYSE:RLJ), reducing the price target to $7.00 from the previous $10.00 while keeping a Hold rating on the stock. Currently trading at $7.40, with a market capitalization of $1.11 billion, InvestingPro analysis suggests the stock is slightly undervalued. The adjustment comes as the analyst, Gregory Miller, recalibrates the company’s financial forecasts, acknowledging the impact of broad economic challenges on the firm’s performance.
Miller’s analysis indicates that despite a recovery in urban business travel, RLJ Lodging Trust is facing significant macroeconomic headwinds. The company’s current EBITDA stands at $338.04 million, with an attractive EV/EBITDA multiple of 10.24x. These difficulties have led to a decrease in the estimated Adjusted EBITDA for 2025, now set at $330 million, down from the earlier projection of $347 million. Similarly, the forecast for Adjusted Funds From Operations (AFFO) per share for the same year has been revised to $1.38 from $1.48.
Looking ahead to 2026, the analyst has also scaled back expectations. The Adjusted EBITDA estimate for 2026 has been revised to $326 million from the prior $360 million forecast, with AFFO per share expected to be $1.35, a decrease from the previous estimate of $1.49. Despite these revisions, the company maintains a notable 8.08% dividend yield and has raised its dividend for three consecutive years, according to InvestingPro data. The new price target is based on a constant multiple of 10.5 times the 2026 EBITDA estimate.
Miller’s commentary sheds light on the specific challenges facing RLJ Lodging Trust, including limited luxury exposure and international inbound demand issues affecting gateway markets. Additionally, certain city-specific factors, notably in Austin and Washington D.C., are contributing to the company’s difficulties.
Despite these challenges, Miller notes that RLJ Lodging Trust benefits from ongoing repositioning efforts and a resurgence in business travel to major urban centers. These factors could help stabilize the company’s performance amidst the broader economic headwinds it faces. For deeper insights into RLJ Lodging Trust’s valuation and future prospects, InvestingPro subscribers can access comprehensive analysis, including 10+ additional ProTips and detailed financial metrics in the Pro Research Report.
In other recent news, RLJ Lodging Trust reported its first-quarter 2025 earnings, showing mixed results. The company posted an earnings per share (EPS) of -$0.02, surpassing the forecasted EPS of -$0.0402. However, revenue fell slightly short of expectations, coming in at $328.12 million against a forecast of $329.08 million. Despite the EPS beat, the revenue miss may have contributed to the stock’s decline. Analysts from various firms have been evaluating these results, but no specific upgrades or downgrades were mentioned. The company is actively managing its debt maturities and has been involved in capital recycling, including the sale of a non-core asset. RLJ Lodging Trust’s diversified urban-centric portfolio showed resilience with a modest RevPAR growth of 1.6%. The company maintains a cautious outlook for 2025, with expectations for comparable RevPAR growth between -1% to +1%.
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