On Thursday, Truist Securities revised its price target for Ryman (NYSE:RHP) Hospitality Properties (NYSE:RHP), a real estate investment trust specializing in hospitality and entertainment assets. The firm's new price target is set at $130.00, down from the previous $135.00, while the recommendation on the stock remains a Buy.
The adjustment follows a reevaluation of Ryman's projected earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted funds from operations (AFFO) per share. The 2024 estimated EBITDA has been decreased to $757 million from $766 million, with AFFO per share now anticipated to be $7.77, a slight drop from the prior estimate of $7.82. Looking ahead to 2025, the EBITDA forecast has been reduced to $817 million from $837 million, and AFFO per share is expected to be $8.88, compared to the earlier projection of $9.06.
The rationale behind the new price target is based on the application of valuation multiples to Ryman's EBITDA estimates. The multiples for the Hospitality and Entertainment segments remain unchanged at 13.0x and 16.0x, respectively. These multiples are applied to the company's projected 2025 EBITDA to arrive at the price target.
The analyst's commentary highlights that Ryman Hospitality Properties ' stock is currently trading at multiples of 11.5 times the firm's 2024 and 2025 EBITDA estimates. This valuation serves as a basis for the maintained Buy rating despite the lowered price target.
InvestingPro Insights
Investors looking at Ryman Hospitality Properties (NYSE:RHP) should note that the company's shares are trading at a forward P/E ratio of 20.25, which is considered low relative to its near-term earnings growth. This is a key metric for investors who are looking for growth at a reasonable price. Additionally, Ryman's liquid assets surpass its short-term obligations, indicating a healthy liquidity position that can reassure investors of the company's ability to meet its immediate financial liabilities.
With a Price / Book multiple of 11.65 as of the last twelve months leading up to Q1 2024, the company is trading at a high valuation when considering its book value. However, this may reflect the market's optimism regarding Ryman's future growth prospects. Analysts predict profitability for the company this year, which, combined with a demonstrated profitability over the last twelve months, could be a sign of underlying strength in Ryman's business model.
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