On Tuesday, Truist Securities maintained a Buy rating on Playa Hotels & Resorts (NASDAQ:PLYA) with a price target of $13.00. The firm noted recent public filings indicating that Playa is in exclusive talks with Hyatt Hotels (NYSE:H) about potential strategic options, which could include a sale of the company. These exclusive discussions are set to continue through February 3rd.
Hyatt, which currently holds a 9.9% stake in Playa and owns the branding for several of the company's highly-rated Ziva and Zilara all-inclusive hotels, is seen as a potential buyer. This speculation about a sale aligns with Playa's previous indications to both analysts and investors that they consider their shares to be undervalued on the public market.
InvestingPro analysis reveals management has been actively buying back shares, demonstrating confidence in the company's value proposition. The company maintains strong liquidity with a current ratio of 2.97, indicating robust financial health.
Despite Hyatt's recent trend towards becoming an asset-lite company, the possibility of them purchasing Playa has been viewed by Truist Securities as more likely than not. Although the deal is not guaranteed, the analyst believes there is a strong chance that the transaction will be finalized.
Truist Securities' confidence in the value of Playa's shares remains firm, with the belief that they are worth at least $13, potentially even more, especially in light of the ongoing discussions with Hyatt. The firm's reiteration of the Buy rating and price target reflects their view of Playa's current value and the potential for a sale to occur.
In other recent news, Hyatt Hotels has entered exclusive negotiations with Playa Hotels & Resorts, potentially leading to strategic developments for the resort operator valued at $1.2 billion. Playa Hotels & Resorts has also been the subject of analyst attention, with Truist Securities upgrading the stock and raising its price target, anticipating solid future growth. Oppenheimer has followed suit, raising Playa's price target based on strong third-quarter earnings and recovery in Jamaica.
Playa's third-quarter earnings exceeded expectations, with a solid performance in the Yucatan and Dominican Republic, and recovery in Jamaica and the Pacific Coast. The company's owned resort EBITDA reached $36.6 million, despite a 36% decline due to Hurricane Barrel and construction disruptions. Playa's capital allocation strategy included significant stock repurchases, maintaining a net leverage ratio of 3.3 times.
Playa Hotels & Resorts ended the third quarter with $211.1 million in cash and $1.08 billion in debt. The company anticipates a stronger holiday period and recovery post-renovations, particularly in 2026. However, it projects a flat to slight decline in EBITDA for 2025 due to renovations and travel advisory impacts.
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