On Wednesday, Evercore ISI made a positive adjustment to its rating on Park Hotels & Resorts (NYSE:PK), changing the status from In Line to Outperform and setting a stock price target of $20.00.
The firm emphasized the stock's attractive valuation as a key reason for the upgrade, noting a significant pullback in shares in the current quarter. The analyst pointed out that despite the recent decline, the stock had shown strong performance in the previous year.
The upgrade was also influenced by expectations of a supportive dividend yield, as well as improving financial estimates for the company. Evercore ISI's forecast for Park Hotels & Resorts' fiscal year 2024 adjusted funds from operations (AFFO) per share is $2.20. With an assumed payout ratio of 65%, this suggests an expected dividend of $1.43 per share, translating to a 9% dividend yield at the present stock price level.
The analyst highlighted that the recent fiscal year guidance raise for Park Hotels & Resorts suggests there are still positive factors affecting the company's portfolio. These include an advantageous footprint in key cities for group events, such as Chicago, New Orleans, and New York, and the benefits from recent renovations in Orlando and Key West properties.
Furthermore, the report mentioned that any recovery in Japanese tourism to Hawaii would be an incremental boost for the company. This detail underscores additional potential for Park Hotels & Resorts' performance improvement, as the Japanese market's recovery could contribute to the company's growth.
The new stock price target represents a notable increase from the previous valuation, reflecting a positive outlook on the company's financial health and market position. The analyst's comments suggest that the current stock price presents an attractive opportunity for investors, based on the anticipated dividend yield and the potential tailwinds identified in the company's operations.
InvestingPro Insights
Evercore ISI's upgrade of Park Hotels & Resorts aligns with several positive indicators highlighted by InvestingPro. The company's aggressive share buyback program is a strong signal of management's confidence in the company's value, a sentiment supported by a high shareholder yield. This aligns with the analyst's view that the stock's valuation is attractive, particularly after the recent pullback.
InvestingPro data also reveals that Park Hotels & Resorts is trading at a high earnings multiple with a P/E ratio of 37.89, suggesting investors have high expectations for the company's future earnings. Still, the company's stock price has experienced significant volatility, and it is currently trading at a price that is 89.25% of its 52-week high. Despite the recent quarter's revenue decline of -1.99%, the company has seen a large price uptick over the last six months, with a total return of 28.46%.
For investors considering diving deeper into Park Hotels & Resorts' financials and stock performance, InvestingPro offers additional insights, including a fair value estimate of $19.15, which is closely aligned with Evercore ISI's price target. The platform provides even more InvestingPro Tips to help investors make informed decisions. To unlock these insights, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 9 additional InvestingPro Tips available for Park Hotels & Resorts, offering a comprehensive analysis for prospective and current investors.
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