U.S. Hotel Operator Hilton Posts Surprise Q4 Loss, Shares Fall
Hilton Worldwide Holdings, one of the largest and fastest-growing hospitality companies in the world, reported a loss for the third consecutive time during the December quarter as a fresh spike in COVID-19 cases and tightening travel restrictions hurt bookings, sending its shares down over 2% in pre-market trading on Wednesday.
The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, reported a net loss of $225 million for the fourth quarter and $720 million for the full year. Adjusted EBITDA was $204 million for the fourth quarter and $842 million for the full year.
Hilton said its system-wide comparable RevPAR slumped 59.2% and 56.7% on a currency-neutral basis for the fourth quarter and full year, respectively, from the same periods a year ago.
The hotel company said its revenue slumped more than 60% to $890 million, well below the Wall Street consensus estimates of $1.03 billion. Adjusted for special items, the company reported earnings per share of -$0.10 per share, well below the market expectations for a profit of $0.03 per share.
“We expect shares to react modestly lower on the lower than expected results, ahead of management’s commentary on the call later this morning. Within the results, we focus on the commentary for the continued generation of mid-single-digit system growth in 2021, which is a primary driver of long-term earnings and margin expansion as well as the valuation,” said David Katz, equity analyst at Jefferies.
“Our confidence remains high in recovery, the trajectory of which is still taking shape.”
Following this disappointing result, Hilton Worldwide Holdings‘ shares, which has risen over 2% so far this year, fell 2.3% to $111 in pre-market trading on Wednesday.
Hilton Stock Price Forecast
Six analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $112.00 with a high forecast of $130.00 and a low forecast of $85.00.
The average price target represents a -1.42% decrease from the last price of $113.61. From those six analysts, three rated “Buy”, three rated “Hold”, none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $101 with a high of $141 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the hospitality company’s stock.
Several other analysts have also updated their stock outlook. BMO raised the target price to $110 from $92. UBS upped the target price to $124 from $114. Berenberg increased the target price to $100 from $77. Baird raises target price to $106 from $105. BMO Capital Markets raised their target price to $92 from $89 and gave the stock a “market perform” rating.
Moreover, Gordon Haskett raised their target price to $114 from $97 and gave the stock a “hold” rating. Wells Fargo & Company raised their target price to $105 from $95 and gave the stock an “equal weight” rating. Argus raised shares to a “buy” rating from a “hold” and set a $120 price target.
“The spread of coronavirus will pressure RevPAR growth, unit growth, and non-room fee growth. Strong management team with a track record of creating value for owners. We see a wide risk-reward that will depend on the severity and speed of recovery from COVID-19,” said Thomas Allen, equity analyst at Morgan Stanley.
“We think HLT is well placed from a liquidity standpoint, but its ability to repurchase stock medium- term may be impaired.”
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