HST: Strong Q2 Revpar And Ebitda Will Drive Bullish Momentum

Analysts nudged their fair value estimate for Host Hotels & Resorts higher, from about $19.54 to $19.79. They cited stronger than expected Q2 RevPAR and EBITDA performance, along with raised 2025 guidance that supports slightly faster revenue growth, a richer future multiple, and only a modestly higher discount rate despite somewhat lower profit margin assumptions.

Analyst Commentary

Bullish Takeaways

• Bullish analysts highlight that Q2 RevPAR and EBITDA meaningfully exceeded expectations, reinforcing confidence in management execution and near term earnings power.
• Raised fiscal 2025 guidance above prior estimates is viewed as a signal of sustained demand strength and improved visibility into growth, supporting higher valuation multiples.
• The upward revision to price targets, even if modest, reflects growing conviction that the shares more accurately price in the improved fundamental outlook.
• Stronger than expected operating trends are seen as providing additional flexibility for capital allocation, which could further enhance shareholder returns over time.

Bearish Takeaways

• Bearish analysts maintain a cautious stance as current valuation already embeds a portion of the recent outperformance, which limits upside relative to risk.
• Despite better results, lingering concerns over potential margin pressure and higher operating costs temper enthusiasm about the durability of earnings growth.
• Some remain wary that elevated expectations for 2025 could prove challenging to meet if macro conditions soften or leisure and group demand normalize more quickly than anticipated.
• The decision to keep ratings more neutral suggests that, while fundamentals have improved, the risk reward profile is not yet compelling enough to justify a more aggressive stance.

What's in the News

• Raised fourth quarter 2025 guidance, now expecting low single digit RevPAR growth, helped by an estimated 5.5% RevPAR increase in October (Key Developments).
• Increased full year 2025 guidance after outperforming expectations in the third quarter, targeting approximately 3% comparable hotel RevPAR growth and 3.4% comparable total RevPAR growth versus 2024 (Key Developments).
• Completed its long running share repurchase program announced in 2017, having bought back 69,099,174 shares, or 9.65% of shares outstanding, for about $1.15 billion, with no additional repurchases in the latest quarter (Key Developments).
• Removed from the FTSE All World Index, potentially affecting passive fund ownership and trading liquidity for the stock (Key Developments).

Valuation Changes

• The fair value estimate has risen slightly, moving from approximately $19.54 to $19.79 per share, reflecting modestly stronger fundamentals.
• The discount rate has edged up marginally, from about 7.94% to 7.95%, signaling a slightly higher required return in the valuation model.
• Revenue growth assumptions have increased modestly, from roughly 2.11% to 2.21%, indicating a somewhat more optimistic top-line outlook.
• Net profit margin expectations have fallen meaningfully, from about 11.86% to 10.81%, incorporating higher cost or mix-related pressures.
• The future P/E multiple has expanded noticeably, from approximately 21.4x to 23.7x, suggesting a richer valuation on forward earnings despite lower margin assumptions.