UBS keeps a Buy rating on Hilton Worldwide (HLT -0.8%) in a fresh look at the hotel operator that factors in the expected gradual rate of recovery this year.
"We believe rate of recovery could be more challenged as we head into Q4, where leisure transient makes up lower mix vs. Q3. While Q4 travel could benefit from extended leisure travel into the fall, we don't expect that dynamic to be meaningful," writes analyst Robyn Farley.
Farley notes that while Hilton's new group business for 2021 is still coming in, on top of rescheduled groups from this year, total group for next year is still below prior periods, so new bookings must be meaningfully slower given rebooked business benefit. Hilton expects two to three years to return to 2019 levels.
UBS' price target of $104 on Hilton is based on 14X to 15X the 2023E EV/EBITDA estimate discounted at 13% annually.
