Tuesday, Jones Trading adjusted its price target on LuxUrban Hotels Inc. (NASDAQ:LUXH), bringing it down to $4.00 from the previous $10.00, while sustaining a Buy rating on the stock. The firm's analyst pointed to LuxUrban Hotels' recent financial performance, noting that the company's reported EBITDA of $5.3 million fell short of both their own and the consensus estimate of $6.2 million.
The adjusted EBITDA, which includes the effects of the transaction with Wyndham, was $9.8 million.
LuxUrban Hotels, as of the fourth quarter of 2023, managed 14 hotels, a decrease from 21 in the third quarter of the same year. The reduction in portfolio size was attributed to certain leases not materializing and the company choosing to exit others due to operational challenges.
Despite these setbacks, LuxUrban continues to refine its collection of properties, focusing on adding hotels rated between 3.5 to 4.5 stars from a strong pipeline of potential acquisitions.
The company's pace in acquiring new properties is expected to slow, a move believed to aid in addressing operational issues more effectively and improving working capital. LuxUrban's earnings per share (EPS) for the fourth quarter of 2023 was reported at a loss of $1.34, which did not meet the analyst's expectation of a $0.05 gain or the consensus estimate of a $0.03 gain.
The shortfall was largely due to non-cash charges and a one-time forfeiture of deposits.
The report mentioned that while these non-cash charges are anticipated to be a one-off occurrence, warrant charges are expected to continue into the first quarter of 2024. The analyst's projections include these charges, estimating them to be around $5.2 million, or $0.13 per share.
With the challenges faced by hotels in securing financing, LuxUrban is still poised for growth, particularly in New York City where the majority of its properties are situated.
Jones Trading's new price target of $4.00 for LuxUrban Hotels represents approximately 100% of their estimated net asset value (NAV) per share for the first quarter of 2024, which is calculated on a fully diluted basis at $3.91. Should this target be met, it would indicate a potential total return of 382% for investors.
InvestingPro Insights
As LuxUrban Hotels Inc. (NASDAQ:LUXH) navigates through operational challenges and refines its property portfolio, real-time data from InvestingPro can provide valuable context for investors considering the company's stock. LuxUrban's market capitalization stands at a modest $30.57 million, reflecting the market's current valuation of the company.
Despite a challenging period, analysts have reasons to be optimistic, anticipating net income and sales growth for the current year. This optimism is echoed in the substantial revenue growth over the last twelve months as of Q1 2023, with an impressive increase of 159.26%.
InvestingPro Tips highlight that while LuxUrban has not been profitable over the past twelve months, analysts predict the company will turn a profit this year. Moreover, the stock has recently entered oversold territory according to the Relative Strength Index (RSI), and it's trading at a low revenue valuation multiple, which could signify a potential buying opportunity for value investors.
For investors looking for more detailed analysis and additional insights, there are over 14 InvestingPro Tips available for LuxUrban, which can be accessed with a subscription. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing your investment research with a comprehensive suite of tools and data.
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