Markets
CUZ

Should You Keep Host Hotels (HST) in Your Portfolio Now?

We have updated our research report on Host Hotels & Resorts, Inc.HST on Nov 23, 2015.

In late October, Host Hotels disclosed third-quarter 2015 adjusted funds from operations ("FFO") FFO per share of 34 cents, above Zacks Consensus Estimate of 32 cents, which reflected improvements in the average room rate and occupancy. The company also announced an additional $500 million share repurchase authorization.

Host Hotels is currently focused on strategic asset repositioning and rebranding initiatives. It has also commenced the execution of its exit strategy from the Asia-Pacific market. It is narrowing down markets of investments and operations, and reducing its exposure to non-prime suburban airport and secondary markets.

Going forward, we expect the company to gain from its solid portfolio of upscale hotels across lucrative markets, strategic capital recycling program and an improved balance sheet. In fact, with strong employment and business investment, fundamentals should remain healthy as demand exceeds supply. Moreover, revenue per available room (RevPAR) growth for the full year is expected to be driven by higher rates, thereby, helping operating margins to improve.

However, with the company repositioning its portfolio, disposition of assets and disruptions due to redevelopment projects is offsetting the impact of growth in comparable hotel revenues, thereby, restricting top-line growth.

Moreover, near-term headwinds are anticipated to limit the company's growth momentum. In fact, international lodging demand is expected to be adversely impacted due to the recent slowdown in the China economy, persistent challenges in the emerging markets' economic prospects and the strengthening of the U.S. dollar. Also, underperformance in some of the U.S. markets could affect its 2015 results.

Over the past 7 days, the Zacks Consensus Estimate for this Zacks Rank #3 (Hold) stock has remained unchanged at $1.51 for 2015 and $1.67 for 2016.

Key Picks from the Sector

Investors interested in the REIT industry may consider stocks like Cousins Properties Incorporated CUZ , Highwoods Properties Inc. HIW and Public Storage PSA . All three stocks have a Zacks Rank #2 (Buy).

Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

HIGHWOODS PPTYS (HIW): Free Stock Analysis Report

HOST HOTEL&RSRT (HST): Free Stock Analysis Report

PUBLIC STORAGE (PSA): Free Stock Analysis Report

COUSIN PROP INC (CUZ): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CUZ PSA HIW HST

Other Topics

Stocks

Latest Markets Videos