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Brean: Time To Buy Hyatt Hotels, It's 'King Of The Capital Recyclers'


In a report published Thursday, Brean Capital analyst Bryan Maher initiated coverage of Hyatt Hotels Corporation (NYSE: H) with a Buy rating and $68 price target. The analyst believes that given the company's relative small size, there are meaningful growth opportunities ahead.

Despite the size of its asset base, the company is well recognized, basically due to the strategic location of its hotels in resort and gateway markets. The analyst believes that this is also "a byproduct of the company's relentless pursuit of industry-leading customer service and brand quality."

According to the Brean Capital report, the company has been capitalizing on growth opportunities via its strong balance sheet and "aggressive capital/asset recycling program," through which Hyatt will buy or develop hotels, brand them as its own and then sell them "while retaining the franchise agreement and often the long-term management (fee) agreement. It has successfully been doing this for years and has grown 27 percent (rooms) since its 2009 IPO."

The brand appeals to investors, developers and consumers equally, which is the reason for Hyatt being able to deliver earnings and unit growth above the market average. "Building on this, over the past several years Hyatt has created several new lodging brands (Hyatt House, Andaz, Hyatt Zilara, Hyatt Ziva and, most recently, Hyatt Centric) all of which it will seek to leverage its existing infrastructure and management talent to grow materially over the next decade," Maher stated.

The company has 50 new hotel openings scheduled through 2015 and its earnings pipeline for 2016 is robust, with 34 percent EPS growth expected in 2016. The outlook for 2017 is also attractive.

Latest Ratings for H

Nov 2020Wells FargoMaintainsEqual-Weight
Nov 2020Credit SuisseMaintainsNeutral
Nov 2020ScotiaBankMaintainsSector Perform

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Posted-In: Brean Capital Bryan MaherAnalyst Color Price Target Initiation Analyst Ratings

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