On Wednesday, Jefferies began coverage on Ryman Hospitality Properties (NYSE:RHP) stock, assigning a Buy rating and setting a price target of $130.00. The firm's optimism about RHP stems from its distinctive hospitality assets that cater to the group market with long booking windows. The expectation is that Ryman Hospitality Properties will see a post-COVID recovery in room bookings and have the potential for incremental asset growth.
The analyst highlighted the long-term value in Ryman Hospitality's growing media and entertainment business, in which it holds a 70% stake. This aspect of the business was noted for its potential to be spun off or unlocked, contributing to the overall positive outlook on the company's shares.
According to Jefferies, their proprietary valuation suggests that Ryman Hospitality Properties' shares are currently undervalued. This assessment positions RHP as a top pick within the firm's Real Estate Investment Trust (REIT) group.
The coverage initiation by Jefferies reflects a belief in the underlying strength of Ryman Hospitality's business model and assets. The company's ability to recover from the pandemic and expand its asset base appears to be a key factor in the firm's favorable rating and ambitious price target.
Investors and market watchers will likely monitor Ryman Hospitality Properties' performance in the upcoming quarters to see if the company meets the expectations set by Jefferies' optimistic outlook and whether the potential for its media and entertainment business will materialize as predicted.
InvestingPro Insights
Jefferies' optimistic outlook on Ryman Hospitality Properties (NYSE:RHP) is supported by several key financial metrics and insights from InvestingPro. The company's P/E ratio of 18.3 over the last twelve months as of Q3 2023 suggests a relatively reasonable valuation, especially considering its PEG ratio of 0.36, which indicates that the stock may be undervalued relative to its earnings growth potential. This aligns with Jefferies' view that RHP shares are currently undervalued.
Furthermore, RHP's revenue growth of 12.62% over the last twelve months as of Q3 2023 demonstrates the company's ability to expand its business, potentially validating Jefferies' expectations for post-COVID recovery and incremental asset growth. The company's strong EBITDA growth of 16.99% over the same period also supports this positive outlook.
InvestingPro Tips highlight that RHP has raised its dividend for 3 consecutive years and is trading at a low P/E ratio relative to near-term earnings growth. These factors may contribute to the stock's attractiveness for investors seeking both growth and income. Additionally, RHP's liquid assets exceeding short-term obligations suggest financial stability, which is crucial for sustaining growth and weathering potential market uncertainties.
For readers interested in a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into RHP's investment potential.
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