Nomura Raises Price Target on Starwood Hotels (HOT)

Nomura Raises Price Target on Starwood Hotels (HOT)


Nomura reported that they have increased their price target for hospitality company, Starwood Hotels & Resorts Worldwide, Inc(HOT) on Friday.

The firm maintained its “Neutral” rating on HOT, and has raised the company’s price target from $63 to $69. This price target suggests a 10% increase from the stock’s current price of $62.06.

An analyst from the firm commented, “2013 led by U.S. and Asia. Our 6% RevPAR outlook is led by strong growth in HOT’s largest markets, North America and Asia. We expect timeshare operating income of $164m, flat with last year‟s $169m result, ex. Bal Harbour. HOT continues to wring cash out of the business, by running down inventory and holding back on CapEx. 2013 reinvestment spending should be ~$60m, below the $400m run rate when HOT was actively growing the top line and not taking any cash out of the business. However, core timeshare should generate ~$150m of cash this year, despite reduced investment. HOT should generate $490m of FCF (including $250m from timeshare), after ~$550m of CapEx ($200m maintenance; $350m Investment), enough to support payment of its $1.25 annual dividend as well as continued share repurchases of ~$300m. We expect HOT to buy an additional 3m shares this year. HOT trades at 12.1x and 11.4x our „13E & „14E EBITDA, a ~100bps premium to the group and MAR.”

Starwood Hotels & Resorts shares were up 69 cents, or 1.12% during Friday morning trading. The stock has increased 10% in the past year.

The Bottom Line
Shares of Starwood Hotels & Resorts Worldwide, Inc(HOT) have a 2.01% yield, based on Friday morning’s price of $62.06.

Starwood Hotels & Resorts Worldwide, Inc(HOT) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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