Starwood Hotels & Resorts - Bear Of The Day

We are downgrading our rating on shares of Starwood Hotels & Resorts (NYSE:HOT) from Hold to Sell. We continue to believe that Starwood’s well-positioned portfolio will benefit given an increase in demand.

However, we currently do not expect an improvement in the operating environment in the near term. Although demand situation continues to deteriorate considerably, the share price has more than doubled off of its lows reached in early March.

We consider the magnitude of this move to be unwarranted. Our price target of $16.50 reflects a multiple of 9.0x our 2009 EBITDA estimate, and 20.0x our 2009 EPS estimate.

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