Baird Upgrades Pebblebrook Hotel, Calls Valuation 'Attractive'

In a report published Tuesday, Baird analysts upgraded the rating on Pebblebrook Hotel Trust PEB to Overweight, while maintaining the price target at $49. Pebblebrook has an attractive valuation compared to its peer group. The company's growth prospects continue to be driven by its excellent management team, high quality and well located portfolio and expected robust earnings growth. "We believe investors are underestimating the upside potential from Pebblebrook's recent (as well as upcoming) renovations and acquisitions," the analysts mentioned. In the report Baird noted, "We expect growth to accelerate in 2H15 and remain robust into 2016 as the company benefits from recently completed renovations, operational upside at recent acquisitions, and improved performance at the Manhattan Collection." Pebblebrook is expected to continue its acquisition spree particularly in the form of redevelopment deals, off-market deals from its operating partners and complicated deal structures. "We expect Pebblebrook's September investor day in San Francisco could serve as a catalyst for shares as investors' focus shifts to robust expected growth in 2016; management could provide commentary on summer leisure trends in NYC, which has remained a persistent investor concern," the analyst commented.