Bernstein downgrades Marriott after a strong run, promotes Hyatt to Top Pick

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Bernstein downgrades Marriott after a strong run, promotes Hyatt to Top Pick
Credit: © Reuters.

Bernstein analysts revisited the firm’s research coverage of the Global Hotels & Leisure sector, prompting him to make some changes.

Marriott (NASDAQ: MAR ) shares fell more than 1.5% in early Monday trading after the analysts downgraded shares to Market Perform from Outperform, citing a strong year-to-date run-up in shares (+42%).

While Bernstein maintains a favorable view of Marriott's mid-to-long-term prospects, especially as the company ventures into the mid-scale market and continues to generate substantial cash flow, the immediate upside potential is constrained by valuation considerations and a deceleration in the luxury segment of the U.S. market.

The new price target of $218 offers just ~5% upside potential. The analysts also hiked the price target on Hyatt Hotels (NYSE: H ) to $147 per share, which is back to Top Pick at Bernstein.

“Hyatt had a noisier Q2, missing EBITDA and not upgrading FY guidance — the stock dropped 8%. This is an entry point. Hyatt remains the fastest NUG and RevPAR growth business trading at an unwarranted discount. The asset light compounding model favors Hyatt starting from a lower margin, and it should deliver the fastest EPS growth,” they wrote.

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