Host Hotels Hits a New 52-Week High - Analyst Blog

Shares of Host Hotels & Resorts, Inc. HST crafted a new 52-week high, touching $21.75 during the trading session on May 12, 2014. The closing price of this lodging real estate investment trust (REIT) on May 12 was $21.71, which reflects a solid year-to-date return of 13.5%. The trading volume for the session was nearly 3.8 million shares.

Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving market fundamentals, strong first-quarter 2014 results, uptick in its outlook, portfolio revamping activity and expected long-term earnings growth of 8.30%.

Growth Drivers

On May 1, Host Hotels & Resorts reported first-quarter 2014 adjusted funds from operations (FFO) per share of 33 cents, exceeding the Zacks Consensus Estimate by 3 cents and the year-ago figure by a nickel. Results reflect a notable rise in Revenue Per Available Room (RevPAR) and food and beverage operations, in the comparable hotels. Host Hotels raised its 2014 adjusted FFO per share guidance and now projects it to be in the range of $1.41–$1.46 (the prior range being $1.40–$1.44).

The company is poised to deliver better results in the quarters ahead too, given its solid portfolio of luxury and upper upscale hotels as well as improving market fundamentals. Particularly, the properties on the West Coast put up a solid performance in the first quarter and this market is expected to continue to outperform in the rest of the year. With strong lodging demand and lower supply, the West Coast remains an attractive market for the company.

Moreover, with prospects for increasing group demand, there exists further scope to improve the business mix and shift to higher-rated corporate group and transient demand, as against lower-rated transient discount business.

As a matter of fact, the company has recorded an average earnings surprise of 4.94% in the past four quarters. Furthermore, over the last 30 days, the Zacks Consensus Estimate for 2014 FFO per share remained stable at $1.44 while that for 2015 moved up a cent to $1.58.

Other Stocks Reaching 52 Wk Highs

In addition to Host Hotels, three other REITs also scaled 52-week highs on May 12. These stocks are SL Green Realty Corp. SLG, Essex Property Trust Inc. ESS and Equity Residential EQR.


Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.