Street Calls of the Week
Investing.com - Goldman Sachs reduced its price target on Wyndham Hotels (NYSE:WH) to $88.00 from its previous target while maintaining a Sell rating on the stock. The new target aligns closely with InvestingPro’s Fair Value calculation, with the stock currently trading near its 52-week low of $75.28.
The research firm cited ongoing challenges in the Economy segment of the hotel market, noting that Wyndham’s revenue per available room (RevPAR) trends have yet to reach bottom, creating uncertainty about whether current difficulties are structural or cyclical in nature. Despite these challenges, InvestingPro data shows the company maintains impressive gross profit margins of 67.6% and has consistently paid dividends for eight consecutive years. Unlock 8 more exclusive InvestingPro Tips and comprehensive analysis with a subscription.
Goldman Sachs also highlighted concerns about Wyndham’s net room growth, which showed only approximately 100 rooms added in the U.S. sequentially, with nearly 60% of growth coming from China, potentially raising longer-term issues regarding mix dilution.
The firm pointed out that royalty and franchise fee growth was significantly below algorithm at -7.5% year-over-year, despite net room growth of 3.9% and RevPAR declining by 5%, though this was partially attributed to one-time factors.
Despite these near-term challenges, Goldman Sachs noted some positive indicators, including improvements in sunbelt states, better booking windows, and reduced cancellation rates, along with potential upside to ancillary revenue growth compared to street expectations for 2025 and 2026.
In other recent news, Wyndham Hotels & Resorts reported its third-quarter earnings, revealing adjusted earnings per share of $1.46, which slightly surpassed analyst estimates of $1.44. However, the company’s revenue fell short of expectations, coming in at $382 million compared to the consensus forecast of $403.64 million. The company also slashed its full-year outlook amid declining travel demand. Global revenue per available room (RevPAR) decreased by 5% year-over-year, with a notable decline in the U.S. due to lower occupancy and room rates. Following these developments, Stifel adjusted its price target for Wyndham Hotels, lowering it to $95.50 from $103.50, while maintaining a Buy rating on the stock. These recent developments highlight the challenges Wyndham Hotels is facing in the current travel market.
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