Wyndham Hotels & Resorts (NYSE: WH) Receives Buy Rating from Goldman Sachs with $96.00 Price Target
Goldman Sachs has initiated coverage on Wyndham Hotels & Resorts (NYSE: WH) with a Buy rating, setting a price target of $96.00. The firm highlighted the improved economic conditions and the company's revised full-year 2024 revenue per available room (RevPAR) guidance as key factors. This reassessment suggests that risks for the second half of the year have been mitigated, potentially offering a more stable period for the hotel operator's stock.
Goldman Sachs projects that Wyndham's room growth will accelerate from 3.5% in 2023 to approximately 4% in the years 2024 and 2025. This growth is expected to outpace historical rates and is attributed to factors such as ECHO developments, enhanced franchisee retention, and expansion in international markets. Despite current Street estimates being approximately 7% below the company's guidance for 2025, Goldman Sachs sees an upside opportunity for Wyndham.
In other recent news, Wyndham Hotels & Resorts has been making significant strides. Stifel recently upgraded its price target for Wyndham Hotels from $89 to $91, maintaining a Buy rating. This adjustment comes following the hotel chain's record growth in its development pipeline, which includes nearly 2,000 hotels and a record 245,000 rooms.
Wyndham's recent financial performance has been promising, with anticipated free cash flow conversion range of around 60% for 2024. The company continues to pay a quarterly dividend of $0.38, yielding 1.9%. Wyndham also reported a solid performance in Q2 of 2024, with a 6% increase in adjusted EBITDA and a 12% rise in earnings per share.
Wyndham Hotels & Resorts' strategic initiatives and financial performance reflect a company that is navigating the hospitality industry's challenges with strength. The InvestingPro data underscores this narrative, showing a robust gross profit margin of 68.08% for the last twelve months as of Q2 2024, which aligns with the company's resilience mentioned by Goldman Sachs. Additionally, the company's commitment to shareholder returns is evident, with a dividend yield of 1.94% and a remarkable 8.57% dividend growth over the same period.
With a market capitalization of $6.18 billion and a forward P/E ratio of 20.27, Wyndham is trading at a premium, reflected in its high Price / Book multiple of 9.92. Yet, the company's stock price is hovering near its 52-week high, showing investor optimism about its prospects. These metrics, coupled with the insights from Goldman Sachs, paint a picture of a company that is not only growing but also rewarding its investors.
Analysis:
In summary, Goldman Sachs' bullish outlook on Wyndham Hotels & Resorts, along with positive developments in the company's financial performance and strategic initiatives, indicate a promising future for investors. With projected room growth, strong financial metrics, and optimistic market sentiment, Wyndham appears to be a solid investment opportunity in the hospitality industry. Investors may consider adding Wyndham to their portfolio for potential long-term value creation and shareholder returns.