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Hilton stock target raised on growth momentum

EditorNatashya Angelica
Published 25/04/2024, 16:16

On Thursday, Macquarie maintained a Neutral rating on Hilton Worldwide (NYSE:HLT) but increased the stock's price target to $205 from $192. The adjustment follows Hilton's announcement of strong growth in the first quarter, including the opening of 17,000 rooms, which marks a 5.6% net unit growth (NUG).

Moreover, the company signed 30,000 rooms, expanding its pipeline to 472,000 rooms, a 10% year-over-year increase.

Hilton has also announced several tuck-in acquisitions. These strategic moves have led management to revise its 2024 NUG guidance upwards to a range of 6.0-6.5%, from the previous forecast of 5.5-6.0%.

The EBITDA (earnings before interest, taxes, depreciation, and amortization) guidance for the same period has been increased to between $3,375 and $3,425 million, which is a $45 million enhancement at the midpoint compared to the consensus estimate of $3,366 million.

The company's shares have seen a notable increase this year, with a year-to-date (YTD) rise of 14%, outperforming the S&P 500's 6% gain. Despite this positive performance, shares are currently trading at 17.0 times and 15.8 times the expected 2024 and 2025 EBITDA, respectively.

This valuation is slightly below Hilton's five-year average. The analyst notes that while the momentum is acknowledged, a more favorable entry point for the stock is anticipated.

InvestingPro Insights

In light of Macquarie's recent assessment of Hilton Worldwide (NYSE:HLT), additional insights from InvestingPro provide a nuanced overview of the company's financial health and market performance. An impressive gross profit margin of 74.87% over the last twelve months as of Q1 2024 underlines the company's strong profitability in its operations.

Despite some analysts revising their earnings downwards for the upcoming period, Hilton's stock has experienced a large price uptick over the last six months, with a total return of 36.01%, and a robust year-to-date price total return of 12.5%. This suggests investor confidence in the company's growth trajectory.

InvestingPro Tips also indicate that Hilton is trading at a high earnings multiple, with a P/E ratio of 44.39, which may reflect investor expectations for future earnings growth. The company's moderate level of debt and its ability to generate a high return over the last decade provide additional context to its financial stability and appeal to long-term investors.

For those seeking more detailed analysis and additional tips, InvestingPro offers a comprehensive list of insights. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 12 additional InvestingPro Tips available for Hilton Worldwide.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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