10 Reasons To Own Hilton Worldwide Stock

In a report issued Thursday, Macquarie analyst Chad Beynon upgraded shares of Hilton Worldwide Holdings Inc HLT to Outperform, setting a price target of $30.

Below are Macquarie’s top 10 reasons for upgrading Hilton now.

On Thursday, Macquarie analyst Chad Beynon shared 10 reasons for upgrading shares of Hilton Worldwide to Outperform.

1)   The company’s 147 owned properties (34 percent of EBITDA) are performing nicely, generating strong margins of 25 percent. Moreover, after being refurbished, the assets could easily be sold or traded for $10 to $13 billion.

2)   Macquarie favors companies exposed to –strong, yet underestimated- US consumers, and Hilton is the second largest hotel chain in the country, with 556k rooms, which contribute with 79 percent of the company’s EBITDA.

3)   Valuation at 11.5/10.5x  ’15/16EV/EBITDA is finally attractive, especially when compared to Marriott International Inc MAR’s. Hilton’s valuation stands 1.9/1.4x EBITDA turns below Marriott’s.

4)   The company has one of the largest pipelines in the industry’s history.

5)   “One of the issues that had bogged Hilton down for years was a cramped balance sheet with a high cost of debt and significant imminent maturities,” the experts explained. However, the company recently announced a dividend, “plans for programmatic share repo (2Q16) and is on track for IG Debt.”

6)   October U.S. results were not as bad as they were thought to be, and November is looking promising.

7)   Three big catalysts could be a timeshare spinoff, a REIT announcement, or even a sale – if a Chinese buyer still exists.

8)   “2016 estimates are achievable,” the experts stated.

9)   “Supply picking up (+1.3%), but still manageable given demand,” they added.

10) The company could be added to the S&P.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.