In a report released today, Chris Woronka from Deutsche Bank maintained a Buy rating on Playa Hotels & Resorts (PLYA – Research Report), with a price target of $16.00.
Chris Woronka has given a Buy rating to Playa Hotels & Resorts for a couple of key reasons. Firstly, the sale of the Jewel Punta Cana was executed at a price significantly above the estimated value from the net asset value (NAV) analysis, which is a strong positive indicator of the company’s asset value realization. The sale price on a per-key basis was consistent with previous transactions, reinforcing the company’s ability to maintain value in its sales strategy. Moreover, the unexpected securing of a long-term management contract for the same property will contribute a steady stream of fee income, further enhancing the financial outlook for Playa Hotels & Resorts.
Additionally, the analyst applauds the decision to utilize the proceeds from the asset sale for additional share repurchases, which could lead to a reduction of 6% of the outstanding shares. This is on top of an already substantial share buyback initiative since mid-2022. With a new $200 million share repurchase authorization in place, this strategy is anticipated to deliver shareholder value. The report also notes the benefit of removing a previously profitable asset that had turned into a negative EBITDA contributor in 2023, streamlining the company’s portfolio and focusing on more lucrative ventures. These strategic moves are expected to bolster Playa Hotels & Resorts’ financial performance and justify the Buy rating assigned by the analyst.
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Playa Hotels & Resorts (PLYA) Company Description:
Playa Hotels & Resorts NV engages in the ownership, operation, and development of all-inclusive resorts in beachfront location destinations in Mexico and the Caribbean. It operates through the following geographical segments: Yucatán Peninsula, Pacific Coast, and Caribbean Basin. The company was founded on March 28, 2013 and is headquartered in Amsterdam, the Netherlands.
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