Shares of Hilton Worldwide Holdings Inc. (HLT) rallied 1.2% and Marriott International Inc. (MAR) tacked on 0.5% in midday trading Friday, after Jefferies's David Katz became Wall Street's most bullish analyst on the hotel operators, citing the belief that investors will increasingly seek "high-quality laggards" as the economy recovers. Katz raised his ratings on both stocks to buy from hold, and boosted his price target for Hilton to $125 from $88 and for Marriott to $101 from $72. His price targets are now the highest among analysts surveyed by FactSet, for both stocks. "Given the strength of the overall market, we expect increased focus on quality companies, enduring models and superb management team that have lagged," Katz wrote in a note to clients. "We consider [Marriott] and [Hilton] among the most prominent in our coverage by this measure and upgrade both to buy from hold." He said his upgrades are with a longer-term view than most of his other ratings, but he has confidence that lodging recovers to a "new normal," facilitating growth, cash flow and capital returns. Hilton shares have dropped 22.0% year to date and Marriott's stock has tumbled 36.0%, while the SPDR Consumer Discretionary Select Sector ETF (XLY) has climbed 14.5% and the S&P 500 has gained 4.4%.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
August 14, 2020 12:23 ET (16:23 GMT)
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