Hilton Jumps as Street Cheers `Healthy' Results, New Outlook
(Bloomberg) -- Hilton Worldwide Holdings Inc. rose 6 percent to their highest since October as investors looked past a 2019 forecast cut that was largely expected and focused on what Jefferies dubbed a “healthy” fourth-quarter earnings beat.
The McLean, Virginia-based hotel chain reported adjusted earnings per share for the fourth quarter of $0.79, which beat the $0.69 consensus. The company also cut its 2019 outlook of revenue per available room to a range of 1 percent to 3 percent from 2 percent to 4 percent.
Shares rose 6 percent to $78.74 at 9:40 a.m. in New York as the S&P 500 rose 0.6 percent. Hilton’s peers rose in sympathy as Marriott International Inc. increased 4 percent and Hyatt Hotels Corp. 3 percent.
“We believe the resetting of expectations sets an achievable hurdle and de-risks the stock for the near term,” said analyst David Katz, who rates the shares hold with a price target of $74. He added that shares will likely have a “modestly positive” reaction on the results.
JPMorgan analyst Joseph Greff, who rates the shares overweight with an $81 price target, said the lowered view was “largely expected.” He added that the company’s fourth-quarter U.S. revenue per available room growth of 1.1 percent shows it “continues to gain share.”
Now, all eyes are on the 10 a.m. conference call, as Katz said investors will be looking for more clarity on the 2019 guidance, the recently launched LXR luxury brand’s effect on near-term unit growth and progress on the Motto brand.
Shares rose as much as 5.6 percent in pre-market morning trading to $78.50, compared to its Tuesday close of $74.32. If the stock trades near that level in the regular session, it would be the highest intraday price since October.
What Bloomberg Intelligence Says
“Hilton’s capacity to sustain its recent pace of unit growth and manage moderate deceleration in fee and revenue per available room (revpar) growth, without compromising Ebitda gains, is likely to be viewed favorably.”
--Brian Egger, global hospitality analyst
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