UPDATE: Credit Suisse Downgrades Choice Hotels to Underperform, Lowers PT to $32

Credit Suisse lowers its rating on Choice Hotels

to Underperform from Neutral and lowers its price target to $32 from $35 on weak unit growth outlook. Credit Suisse says, "Given a strong recent run in shares, we are taking this opportunity to downgrade CHH to Underperform from Neutral. While CHH has a steady and predictable franchise-based business model, conservative management, and a strong balance sheet, we believe shares will lag full-service owner-operators as well as those more levered to a recovery in incentive fees or international growth. Given its pure-franchise model that relies on unit growth, we believe CHH shares will underperform given that a lack of financing will likely limit new construction, competition for hotel conversion opportunities will remain high, and the company has almost no exposure to emerging markets growth" CHH closed at $36.80 per share on Monday.