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JPMorgan Downgrades Hilton Grand Vacations After Q2 Print, Says Stock In 'Penalty Box'

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JPMorgan Downgrades Hilton Grand Vacations After Q2 Print, Says Stock In 'Penalty Box'

Hilton Grand Vacations Inc (NYSE: HGV) shares were falling Friday after JPMorgan downgraded the stock.

The Analyst

Brandt Montour downgraded Hilton Grand Vacations from Neutral to Underweight and lowered the price target from $30 to $24.

The Thesis

JPMorgan expects poor sentiment to weigh on shares until contract sales reaccelerate in a consistent way, which the sell-side firm does not expect to occur until 2020, Montour said in the downgrade note. (See his track record here.) 

Hilton Grand's deed-based business model — rather than points — is a structural disadvantage compared to its peers, the analyst said. 

Overall, the timeshare business has not been performing well, with all three major timeshare operators either reporting muted contract sales growth, in the case of Wyndham Destinations Inc (NYSE: WYND), or lower full-year contract sales guidance, in the case of HGV and Marriott Vacations Worldwide Corp (NYSE: VAC), he said. 

“We wouldn’t be surprised if investors start re-questioning consumer demand for timeshare more broadly here,” Montour said. 

Hilton Grand Vacations reported another weak second quarter on Thursday, characterized by what Montour said were deteriorating timeshare contract sales trends and lower operating and earnings guidance metrics for the full year.

"Yesterday’s results likely put HGV into the penalty box with investors."

Price Action

Hilton Grand Vacations shares were down 5.93% at $26.47 at the time of publication Friday. 

Related Links: 

Will Short-Term Rentals Kill The Timeshare Industry?

SunTrust Downgrades Hilton Hotels And RLJ Lodging Trust

Photo by Ronnie Macdonald via Wikimedia

Latest Ratings for HGV

DateFirmActionFromTo
Oct 2019SunTrust Robinson HumphreyMaintainsBuy
Sep 2019Janney CapitalDowngradesBuyNeutral
Sep 2019NomuraMaintainsNeutral

View More Analyst Ratings for HGV
View the Latest Analyst Ratings

 

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