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Host Hotels, Xenia Hotels downgraded to Underweight at Morgan Stanley.

Morgan Stanley analyst Thomas Allen noted that his firm's economists expect business investment spending growth to slow from 6.6% in 2018 to 2.6% in 2019 and GDP growth to slow to 2.3% from 2.9%, adding that history suggests that U.S. hotel room nights should come under pressure due to reduced corporate demand in such a scenario. Given this context, Allen downgraded both Host Hotels (HST) and Xenia Hotels (XHR), each to Underweight from Equal Weight, stating that if RevPAR comes in weaker than expected, and cost inflation accelerates, they are at risk. Allen lowered his price target on Host to $16 from $21 and on Xenia to $17 from $22. Adding that he expects the Lodging REITs he covers to miss comparable consensus EBITDA expectations by 3% in 2019, Allen also lowered his price target on DiamondRock (DRH) to $8 from $11 and on Sunstone Hotel (SHO) to $12 from $15.

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Publication:The Fly
Date:Dec 20, 2018
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