The stock market was hovering near the flatline on Friday, but hotel real estate investment trust Ashford Hospitality Trust (NYSE: AHT) was a major standout. As of 2:45 p.m. EDT, Ashford's stock was higher by a staggering 33%.
The immediate reason for today's pop appears to be a huge analyst upgrade of the stock. Deutsche Bank raised its price target on Ashford to $15 per share, which is about twice the stock's current price, even after today's rally.
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Earlier this week, Ashford completed a 1-for-10 reverse split for the primary reason of raising the company's stock price. In a nutshell, the NYSE requires a minimum share price of $1 as part of its continued listing requirements, and Ashford had been under that level for quite some time. Hotel stocks have been one of the hardest-hit parts of the market during the pandemic, and Ashford's properties (most of which are large, upscale hotels) saw revenue plunge.
To be clear, we never advise investing in a stock just because an analyst upgrades it, but this does show us that Deutsche Bank doesn't appear to think Ashford is in as rough shape as its stock price indicates. We'll have to wait to see how Ashford's properties perform for the rest of 2020, but there could certainly be some long-term value in the hotel REIT space for patient investors once the COVID-19 pandemic is in the past. If Ashford's business comes roaring back as strong as ever in 2021, it wouldn't be inconceivable for its stock price to double -- just know that's a big if at this point.
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