Results from Delta Airlines (NYSE: DAL) to Booking.com (NASDAQ: BKNG) have put the bid back into travel and leisure stocks. Recently launched travel and leisure ETFs like Defiance Hotel, Airline and Cruise ETF (NYSEARCA: CRUZ) and ALPs Fund Services Global Travel Beneficiaries ETF (NYSE: JRNY) are up about 30% off of their 2022 lows and heading higher if the analysts have anything to do with it. The analysts are upgrading their favorite names in the hospitality sector and today’s list includes 3 hotels.
These hotels represent the largest and most recognizable chains on the planet and are well-positioned in more ways than one. Not only do they command the bulk of the world's available hotel and motel bed space, but the same can be said of investable dollars earmarked for this sector. According to the American Hotels & Lodging Association US hotel traffic is expected to exceed pre-pandemic levels. This will be compounded by higher prices and larger networks for most big chains.
Hilton Worldwide Holdings Is Trending Higher
Hilton Worldwide Holdings (NYSE: HLT) confirmed its uptrend following the latest earnings report. The company beat on the top and bottom lines while offering favorable guidance due to strength in the travel market. The company cited growth across all segments and opportunities for additional growth due to ongoing consolidation within the industry. Opportunities include acquisitions and the expansion of portfolio brands, including the latest addition, Spark by Hilton.
The results sparked several analyst updates that have the consensus price target edging higher after a year of edging lower. The takeaway is that analyst sentiment in this stock has held relatively steady over the past year despite economic uncertainties, and there is a potential catalyst in the data. The price target is edging higher, but the stock has not had an upgrade to sentiment since September.
There have been 2 downgrades contrary to the outlook, the results, and the price target trend. They have set the stock up for upgrades assuming business momentum carries into the spring and summer as expected. As it is, the consensus price target is only a few points above the price action and may keep the stock from moving much higher in the near term.
Marriot International Led Higher By The Analysts
The consensus sentiment toward Marriot International (NASD: MAR) is as tepid as with Hilton, but the price target trend is much hotter. The consensus is near $180 or about 5% above the price action compared to only 3.25%, but there is more. This price target is trending higher versus last month, last quarter, and last year, which could get it up to a new high. The price action suggests this market is gearing up for such a move and it could begin at any time. The last 7 analysts' actions are price target upgrades with 6 targets above the consensus and 1 in line. The institutional activity is also favorable with the sell-side accumulating over the past few quarters. If these trends continue, a new high is all but assured.
Plays Hotels And Resorts Is The Top Pick
Playa Hotels and Resorts (NASDAQ: PLYA) is a smaller operator focusing on beachfront properties in Mexico and the Caribbean. The company’s Q4 results prove its properties are in demand, the guidance is favorable, and the analysts have it pegged at a Buy. This is based on only 4 analysts, but the firms involved include Oppenheimer, Citigroup, Truist, and Deutsche Bank so carry more weight than some. The salient point is the Deutsche Bank just raised its price target to $15, setting the high-price mark. This target is almost double the stock price and well above the consensus target, suggesting that a 35% of upside is possible.
The price action is favorable as well. The market has the price near resistance at the pre-pandemic levels and is on the way to setting new highs. If resistance near $9.50 is broken, this stock could quickly rise to the $12 consensus target or higher.