© Reuters. Macquarie maintains neutral rating on Hilton (HLT) despite positives
Analysts at Macquarie Equity Research look favorably on Hilton (HLT) stock, describing it as the most stable and resilient hotel operator in the face of a recession.
However, the company maintained a Neutral rating and $192 price target on the name in a note on Wednesday, saying it believes there could be slight underperformance given the company's segments.
“Hilton has come a long way since its IPO in 2013, having achieved a net unit growth (NUG) CAGR of 5.7%, while increasing room rates by 20% and returning more than $9 thousand million to shareholders, highlighting the company's powerful asset-light, fee-based technology business model,” Macquarie wrote.
HLT was said to have painted a compelling picture of its diversified, asset-light growth engines, boosting the company's impressive return on capital profile at its recent Investor Day.
“Investors are rewarding consistent large-cap producers and HLT has benefited from this,” Macquarie added. “We believe investors will continue to view continued fee growth, NUG's 6-7% outlook and return on capital story positively, but we expect a better entry point with shares +14% year-to-date, in line with its lodging peers and vs. +8%. S&P500, and trades at 17.5x' 25E cons EV/EBITDA, ~0.5x above the 5-year average.”
The firm also cited HLT's lower exposure to upscale and luxury chain scales as a reason for the Neutral rating.