Buy Rating Affirmed for Wyndham Hotels & Resorts Amidst Strong Growth and Strategic Buybacks

Analyst Michael Bellisario from Robert W. Baird maintained a Buy rating on Wyndham Hotels & Resorts (WH – Research Report) and keeping the price target at $86.00.

Michael Bellisario has given his Buy rating due to a combination of factors that show Wyndham Hotels & Resorts’ positive performance and strategic financial actions. Despite earnings for the first quarter of 2024 being only slightly ahead of reduced expectations, the company has passed the toughest year-over-year growth comparisons. Bellisario notes the company’s plan to increase share buyback activity, which involves leveraging up, as a supportive move for the stock in the near term. He also recognizes that the company’s management has maintained full-year guidance, and their execution of this plan will be critical moving forward. Additionally, the net unit growth for the company is on a good track, indicating a strong operational position.

The analyst’s optimism is further supported by improving trends in Revenue Per Available Room (RevPAR), with positive indications for both U.S. and international markets, even with currency impacts considered. The planned capital allocation towards stock repurchases, backed by an increase in the company’s debt to EBITDA ratio, is viewed positively by Bellisario, especially given the stock’s current price and year-over-year growth comparisons. The full-year guidance has been adjusted to reflect the recent buyback activity with all other ranges maintained, which suggests management’s confidence in the company’s performance. Bellisario’s price target also takes into account Wyndham’s improving growth outlook over the next few years, applying a premium to the P/E multiple relative to the S&P 500.

Bellisario covers the Real Estate sector, focusing on stocks such as Pebblebrook Hotel, Apple Hospitality REIT, and Diamondrock. According to TipRanks, Bellisario has an average return of 6.2% and a 52.75% success rate on recommended stocks.

In another report released yesterday, Deutsche Bank also maintained a Buy rating on the stock with a $89.00 price target.

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Wyndham Hotels & Resorts (WH) Company Description:

Wyndham Hotels & Resorts, Inc. engages in the franchise and operation of hotels under the Wyndham brand. It operates through the following segments: Hotel Franchising and Hotel Management. The Hotel Franchising segment offers licenses of brand names and associated trademarks to hotel owners under long-term franchise agreements. The Hotel Management segment provides management services. The company was founded in 1990 and is headquartered in Parsippany, NJ.