On Wednesday, Evercore ISI updated their valuation of Hilton Worldwide (NYSE:HLT), increasing the price target of the shares from $200 to $210, while keeping the stock's rating at In Line.
The firm's assessment followed Hilton's Investor Day event in Washington D.C. on Tuesday, where the company discussed its achievements since its initial public offering in late 2013, introduced its leadership team, and presented its growth strategy through 2026.
Hilton's growth algorithm is expected to align with the long-term expectations of its investors, with key performance indicators such as 2-4% Revenue per Available Room (RevPAR) and a Compound Annual Growth Rate (CAGR) of 6-7% in net unit growth. The company aims to source 30-35% of its unit growth from brand conversions rather than new constructions, and it plans to increase royalty fees to 6% from the current 5% for some of its brands.
The company also emphasized its investment in technology to enhance data collection and improve guest experiences. Hilton's capital allocation strategy prioritizes a consistent approach to stock buybacks, as opposed to a matrix or opportunistic approach.
Evercore ISI's report included detailed notes and key slides from the Investor Day, providing insights into Hilton's strategic direction and financial targets. The revised price target reflects the firm's confidence in Hilton's planned initiatives and expected performance over the next few years.
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