On Monday, Goldman Sachs analysts revised their stance on Hilton Worldwide Holdings Inc. (NYSE:HLT), downgrading the hotel giant from ’Buy’ to ’Neutral’. Alongside the rating change, the firm also lowered its price target for Hilton’s shares to $235 from $296. According to InvestingPro data, the stock currently trades at $212.41, with analyst targets ranging from $225 to $312, suggesting mixed views on its valuation potential. The downgrade comes amid concerns over recent economic fluctuations and pressures on consumers, which may negatively impact sectors sensitive to macroeconomic factors, such as incentive management fees (IMF), credit card revenues, and owned and leased segments.
In their analysis, Goldman Sachs acknowledged the strength of Hilton’s business model, highlighting the company’s robust cash flow per share and a resilient balance sheet. This is reflected in InvestingPro’s impressive financial health score of 3.01 (GREAT), with notably high gross profit margins of 76.27%. Despite these strengths, the analysts pointed out that Hilton’s current valuations are still higher than the mid-to-late cycle years of 2016 to 2019, with the stock currently trading above InvestingPro’s calculated Fair Value. This observation suggests that the stock’s price may not fully reflect potential challenges ahead.
Goldman Sachs also addressed the broader market’s expectations, noting that consensus estimates might be overly optimistic, especially regarding IMF and non-revenue per available room (non-RevPAR) fees. Current metrics from InvestingPro show the stock trading at elevated multiples, with a P/E ratio of 34.32 and an EV/EBITDA of 24.64. With the anticipated headwinds and the potential for estimates to be recalibrated, the analysts see the risk/reward balance for Hilton as more evenly matched at this time. For deeper insights into Hilton’s valuation metrics and 12 additional ProTips, subscribers can access the comprehensive Pro Research Report.
The downgrade of Hilton Worldwide also extended to another major player in the hospitality industry, Marriott International (NASDAQ:MAR), which Goldman Sachs similarly downgraded to ’Neutral’ from ’Buy’. Both companies are recognized for their leading positions within the sector, but the current economic climate and its possible effects on their performance have prompted a more cautious outlook from the investment firm.
Investors in Hilton Worldwide Holdings Inc. may need to consider the implications of these revised expectations as they relate to the company’s future performance and stock valuation. The new price target of $235 set by Goldman Sachs reflects a recalibration of the firm’s view on the stock’s potential in light of the identified macroeconomic challenges.
In other recent news, Hilton Worldwide has announced the nomination of Marissa Mayer to its Board of Directors, succeeding Judith McHale, who is set to retire. Mayer’s extensive experience in technology is expected to contribute to Hilton’s growth in this sector. Meanwhile, Raymond James has raised its price target for Hilton to $290, reflecting strong fourth-quarter earnings and 2025 EBITDA guidance that surpassed expectations. The firm’s analysts have reiterated an Outperform rating, highlighting Hilton’s revenue per available room (RevPAR) outperformance and its projected net unit growth of 6-7% in 2025.
Marriott International also reported robust fourth-quarter earnings and revenue, surpassing expectations with strong RevPAR growth across all regions. Despite this, Raymond James maintained a Market Perform rating, noting that Marriott’s 2025 earnings per share forecast fell slightly below analyst consensus. In the airline sector, Delta Air Lines (NYSE:DAL) announced a significant reduction in its profit guidance due to decreased consumer spending, impacting the broader travel industry. American Airlines (NASDAQ:AAL) also adjusted its revenue expectations to flat growth, citing recent aviation incidents as a contributing factor.
Additionally, Elon Musk’s Department of Government Efficiency (DOGE) team uncovered that FEMA unlawfully transferred $59 million to luxury hotels in New York City to house undocumented immigrants, prompting a demand for fund recovery. These developments have drawn investor attention as they assess the potential impacts on the travel and hospitality sectors.
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