Credit Suisse Initiates Coverage on Hilton Worldwid

In a report published Tuesday, Credit Suisse analyst Joel Simkins initiated coverage on Hilton Worldwide HLT at Outperform, establishing a $25.00 price target. According to the report, the coverage initiation was based on a blended multiple of 13.7 on our 2015 EBITDA estimate, discounted back. “Investors are familiar with HLT, given its scale within lodging and tenure in the public markets prior to its acquisition by private equity in 2007,” the report noted. “Much about the company has changed during this period, as HLT is led by well respected lodging veteran Chris Nassetta (former CEO of HST). HLT is increasingly transitioning toward an asset-light business model, and by year-end 2015, we estimate that asset-light management and franchising EBITDA will account for 60% of profitability, versus 58% in 2013.” Some risks from the report included a slowdown in U.S. RevPAR trends, greater than expected ramp of lodging supply, selling pressure from secondary offerings, relatively high balance sheet leverage and larger focus on timeshare. HLT closed Friday at $22.25 with shares trading up at 1.32 percent.