Bull Vs. Bear: Deutsche Bank Is Running From Hyatt, But SunTrust Isn't

In a report published Wednesday, Deutsche Bank analyst Carlo Santarelli downgraded the rating on Hyatt Hotels Corporation H from Buy to Hold, while lowering the price target from $66 to $62. The analyst believes the stock doesn't offer an “overly favorable” risk/reward profile, while adding there are no significant catalysts in the foreseeable future.

According to Santarelli, “[Deutsche Bank analysts] view H's lack of guidance, most notably in a more skittish lodging environment, as a risk and believe investors have become incrementally frustrated with some of the noise surrounding JV earnings / portfolio transactions.”

The company reported that its best owned hotels markets for 2Q were Orlando, Atlanta, Chicago, Amsterdam, and several cities in California. However, its two owned hotels in NYC posted mixed results, while the Park Hyatt has not as yet been included in the comp set.

While Hyatt’s European RevPAR rose in the low single digits, on a constant currency basis, in the Middle East RevPAR declined more than 10 percent.

The 2015 and 2016 adjusted EBITDA and EPS estimates have been lowered to reflect the 2Q results and model tweaks.

SunTrust Disagrees

In a report published Wednesday, SunTrust Robinson Humphrey analyst C. Patrick Scholes maintained a Buy rating on Hyatt Hotels, while lowering the price target from $71 to $70, following the company’s 2Q results.

Hyatt reported its 2Q adjusted EBITDA in line with the SunTrust estimates but below the Street consensus. “The company noted asset sales hurt y/y results by $25M and FX negatively impacted the y/y result by $8M,” the SunTrust report stated.

RevPAR for comparable owned and leased hotels in 2Q came in below the estimates. Managed and franchised hotels’ RevPAR in the Americas grew more than 6.3 percent, marginally higher than the estimate, while that in the ASPAC and EAME/SW Asia regions declined, coming in meaningfully below the estimate.

Hyatt continued to buyback shares, repurchasing 2.7 million shares in 2Q and 0.4 million shares in the first 30 days of 3Q. The board has authorized the repurchase of shares worth another $400 million.

However, similar to Deutsche Bank, the SunTrust analyst lowered the 2015 and 2016 EBITDA and EPS estimates, following the 2Q results.