UPDATE: Morgan Stanley Initiates Coverage on Sunstone Hotel Investors with Equal-Weight Rating, $14 PT on Good Upside from Current Levels

In a report published Thursday, Morgan Stanley analyst Thomas Allen initiated coverage on Sunstone Hotel Investors SHO with an Equal-Weight rating and $14.00 price target. In the report, Morgan Stanley noted, “We rate AHT Equal-weight with a $14 PT, representing 15.8% upside from current levels. Based on our 2014E sum-of-the-parts analysis, we believe AHT's stock is worth $14, implying 11.5x ‘14e EBITDA. Our analysis assumes that AHP is valued at 12.5x, in-line with peers given its high quality portfolio (2014E RevPAR ~$163 vs. AHT legacy portfolio ~$109), but a discount to DRH/LHO due to its external management structure. We value the remaining AHT portfolio at 11.25x, in line with current levels.” Sunstone Hotel Investors closed on Wednesday at $12.50.