Analysts Downgrades Hyatt (H, $68.25) over Slowing Global Economy

Wall street analyst, William Crow, recently downgraded Hyatt from outperform to market perform and removed its $80 price target. His rationale was that a challenging economic backdrop is expected to hurt the prospects of Hilton Hotels most, resulting in a substantial slowdown in the company’s asset sales in 2019.

Hyatt’s attractive stock valuation remains comparable with Hilton Hotels Corporation and Marriott International Inc. But while Hilton and Marriot have been successful in returning valuable capital to its shareholders, Hyatt’s shares have historically traded at modest discounts compared to Hilton’s and Marriot’s.

Although Hyatt has attained significant growth in 2018, analysts fear a significant decline in its planned asset sales in 2019 which can impact profitability.

Hyatt’s shareholder relations have markedly improved over the years, but whether shareholders benefit from Hyatt’s on-going investments in wellness and ‘experiential’ businesses is still uncertain.

Analysts further explain that the lack of detailed guidance on the part of the company has historically led to volatility around quarterly earnings. Furthermore, with the hotels betting big on Chinese consumers for driving growth, coupled with Apple facing a tough time in China, the hoteliers could be up for a bumpy ride in 2019.