Jefferies raises these hotel stocks to Buy, highlights business model strength

May 13, 2025 12:13 AM AEST | By Investing

Google News:

Jefferies raises these hotel stocks to Buy, highlights business model strength

Recent News

TCL CSOT Powers OPPO Pad 4 Pro with Exclusive 3.4K Display, Delivering...

FAIR PLAY MENARINI INTERNATIONAL AWARD: THE 29TH EDITION OFFICIALLY BE...

Epicsoft Asia Pte. Ltd. Announces Close of Offer for Ban Leong Technol...

Arctech took center stage at the Africa Energy Forum 2025

Investing.com -- Jefferies upgraded Marriott International (NASDAQ:MAR) and Hilton Worldwide Holdings (NYSE:HLT) to Buy from Hold in a note Monday, citing the strength and resilience of their asset-light business models in the face of economic uncertainty.

“We believe the business model strength is positioned to grow through the currently uncertain business climate,” Jefferies analysts wrote.

They added that “peak multiples (17.5X for MAR, 19.5X for HLT) are appropriate as shares currently trade mid-range (15.1X, 16.7X).”

Jefferies identified net unit growth (NUG) as the key long-term driver of earnings, rather than cyclical metrics like revenue per available room (RevPAR).

“NUG has proven the core model driver, despite anemic, volatile RevPAR since 2017,” analysts noted, pointing to MAR and HLT’s track records of delivering “durable MSD NUG” alongside consistent fee, EBITDA, and free cash flow growth.

Jefferies also highlighted the compounding benefits of system expansion, including loyalty program gains and growing co-branded credit card revenue.

Since 2019, loyalty programs have grown at a 10% CAGR for MAR and 15% for HLT, while card fees are projected to grow faster than core fees through 2027.

Despite potential short-term risks to estimates, Jefferies said now is a favorable time to buy.

“History suggests that times of low visibility have proven opportune,” with both stocks down 15% to 20% from February highs. Since 2015, MAR and HLT shares have returned 340% and 560%, respectively.

Jefferies raised its price targets using “near-peak multiples” on 2026 estimates, applying 17.5X EV/EBITDA and 28.5X P/E for MAR and 19.5X EV/EBITDA and 35X P/E for HLT, concluding that “the earnings growth&durability of MAR and HLT justify a higher valuation.”

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.