Starwood Hotels & Resorts (HOT): Bear Of The Day

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Starwood Hotels & Resorts (HOT): Bear Of The Day

By Zacks Investment Research on July 27, 2009 | More Posts By Zacks Investment Research | Author's Website

We maintain our Sell rating on shares of Starwood Hotels and Resorts Worldwide (HOT). The shares have climbed significantly since bottoming out in early March.

Industry fundamentals have continued to deteriorate, with year-to-date weekly revenue per available room, or RevPAR, down nearly 20% versus the year-ago period.

On the second quarter conference call, management stated that the company expects RevPAR at same-store company-operated hotels worldwide to decline 20% in 2009. Additionally, the company anticipates that RevPAR will decline 25% at branded same-store owned hotels worldwide during 2009.

Although we believe that Starwood is well positioned for the long-term, we expect that operating conditions will weaken further before improving. Our price target of $17.00 reflects a multiple of 9.0x our 2009 EBITDA estimate, and 26x our 2009 EPS estimate.

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