By Sam Boughedda
An Evercore ISI analyst upgraded shares of Hyatt Hotels (NYSE:H) to Outperform from In-line with a price target of $100 per share in a note to clients Tuesday.
The analyst explained Hyatt is more than just a bet on the travel cycle sustaining, as it "transitions to asset-light fee-based revenue (80% goal by 2024), from heavier owned hotel mix."
"The company’s transition to an asset light model and greater leverage of SG&A spend should sharply increase free cash flow generation over time," stated the analyst. "While we view the asset-light brands (HLT, H, MAR) as attractive overall on the recent pullback, Hyatt offers greater long-term re-rate potential, in our view."
Commenting on travel restrictions, the analyst stated that parts of the world that have had the most conservative stances are starting to ease, with Japan recently announcing it is resuming Visa-free entry for individual travelers and removing inbound passenger caps on October 11 and Hong Kong announcing an end to its hotel quarantine requirement with arriving passengers no longer needing to get a negative PCR test.
"APAC represents ~18% of global rooms for Hyatt. Not to be outdone, Canada announced it its dropping vaccine, testing and mask requirements effective October 1," wrote the analyst. "We see continued business transient and group recovery in the US as well."