UPDATE: Baird Equity Research Downgrades Choice Hotels International to Underperform, Reiterates $41 PT on Full Valuation

In a report published Monday, Baird Equity Research analyst David Loeb downgraded the rating on

from Neutral to Underperform, but reiterated the $41.00 price target. In the report, Baird Equity Research noted, “Downgrading to Underperform on full valuation. Shares of Choice are trading at a significant premium to hotel C-Corp peers, historical multiples, and other franchised-based companies, which we believe is unwarranted given the company's slower-growth business model. Free cash flow growth should remain modest as the company continues to invest in various growth initiatives, which have yielded mixed results so far. We believe the biggest risks to our downgrade are potential value-additive M&A and greater-than-expected valuation creation from SkyTouch Technology.” Choice Hotels International closed on Friday at $46.78.