Analyst Downgrades Hyatt Hotels Amid Slowing Global Economy

A more challenging economic backdrop could hurt the prospects of Hyatt Hotels Corporation H and result in a significant slowdown in the company’s asset sales in 2019, according to Raymond James.

The Analyst

Raymond James’ William Crow downgraded Hyatt Hotels from Outperform to Market Perform, removing his $80 price target.

The Thesis

Although Hyatt’s stock valuation remains attractive and even “borders on compelling,” the same is true for both Hilton Hotels Corporation HLT and Marriott International Inc MAR, Crow said.

Hyatt’s shares have historically traded at a modest discount to Hilton’s and Marriott’s shares, Crow said in the note. Both Hilton and Marriott are asset light and have been returning capital to shareholders.

Hyatt’s transition hasn't been smooth. Although the company made significant progress in 2018, there’s a “high likelihood” of a significant decline in its asset sales in 2019, Crow added.

Benefit to shareholders from Hyatt’s ongoing investments in wellness and “experiential” businesses is still unclear. Despite the marked improvement in Hyatt’s shareholder relations over the years, the company remains well behind Marriott and Hilton. Moreover, the lack of detailed guidance has “historically led to volatility around quarterly earnings,” the analyst wrote in the report.

Price Action

Shares of Hyatt Hotels traded around $68.50 Tuesday afternoon.

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Photo courtesy of Hyatt Hotels.