Starwood Hotels For Sale? These Analysts Are Buying

• Starwood Hotels & Resorts Worldwide Inc HOT shares are down 2 percent year-to-date, despite having climbed 22 percent since September 29.
• Canaccord Genuity’s Ryan Meliker maintained a Buy rating on the company, while raising the price target from $89 to $93.
• Starwood Hotels’ shares are expected to be driven by the company’s strategic review process and a favorable lodging cycle, Meliker stated.

Starwood Hotels’ shares have risen 16 percent over the past two days on news of the company being in sale talks with Hyatt and three Chinese companies, analyst Ryan Meliker said, while adding that there is scope for more upside.

Meliker expects Starwood Hotels’ shares to be driven by the company’s strategic review process that is currently underway and likely to be completed by yearend.

“While we recognize that if the strategic review results in no material actions the stock will trade off, we think that is an unlikely outcome and that the lodging cycle in and of itself should drive the stock above current levels over the next year,” the analyst wrote.

The likely acquirers of Starwood Hotels are InterContinental Hotels Group PLC (ADR) IHG, private equity and foreign hotel companies. “We don't believe Hyatt is a realistic suitor as the match doesn't make sense strategically, financially or culturally,” Meliker commented.

The recurring EPS estimate for 2016 has been reduced from $3.27 to $2.92. The revised figures assume the sale of the company’s timeshare business on December 31, 2015.