On Thursday, Truist Securities adjusted their financial outlook for Hilton Worldwide (NYSE: HLT), increasing the hotel giant's price target to $220.00, up from the previous $208.00. The firm has decided to maintain a Hold rating on the stock despite the price target adjustment.
The revision in the price target comes after a detailed analysis of Hilton's anticipated financial performance. Truist Securities has updated its 2024 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) estimate for Hilton to $3,402 million, a slight increase from the previous forecast of $3,397 million. However, the estimated Earnings Per Share (EPS) for the same year has been marginally adjusted to $7.04 from $7.05.
Looking ahead to 2025, the firm has also made adjustments to its projections. The Adjusted EBITDA estimate for Hilton in 2025 is now set at $3,689 million, which is a decrease from the earlier prediction of $3,721 million. Correspondingly, the EPS forecast for 2025 has been revised to $7.96 from the former estimate of $8.17.
The updated price target of $220 is based on a blended EBITDA multiple of 17.6 times, which is an increase of 90 basis points from the previous multiple. This valuation is applied to the firm's 2025 EBITDA estimate. Truist Securities justifies the raised managed/franchised target multiple, which now stands at 18.0 times, by highlighting Hilton's improved EBITDA margin. Since 2019, Hilton's Adjusted EBITDA margin has increased by approximately 600 basis points, which the firm believes warrants a higher valuation target multiple.
In other recent news, Hilton Worldwide Holdings (NYSE:HLT) Inc. has been the subject of significant updates. Deutsche Bank has maintained a Hold rating on Hilton stock, while increasing the price target to $200 from the previous $181, following an analysis of the company's performance and future expectations. The bank's report highlighted a deceleration in Hilton's Revenue per Available Room (RevPAR), but noted the company's strong unit growth outlook.
Hilton's recent Third Quarter 2024 Earnings Conference Call showcased a robust performance, with record hotel openings and a significant milestone achieved in its loyalty program. The company reported a system-wide RevPAR increase, strong development pipeline, and an optimistic outlook for the remainder of the year and beyond. In particular, Hilton achieved record net unit growth with the opening of 531 hotels, and the Hilton Honors program reached 200 million members.
Additionally, Hilton's executives expressed confidence in achieving the 2025 EBITDA target of $3.69 billion.
InvestingPro Insights
Recent data from InvestingPro adds valuable context to Truist Securities' analysis of Hilton Worldwide. The company's market capitalization stands at $56.92 billion, reflecting its significant presence in the hospitality industry. Hilton's impressive gross profit margin of 76.04% for the last twelve months ending Q3 2024 aligns with one of the InvestingPro Tips, which highlights the company's "impressive gross profit margins."
Another relevant InvestingPro Tip notes that Hilton has been "aggressively buying back shares," which could potentially support the stock price and enhance shareholder value. This strategy may contribute to the stock's strong performance, as evidenced by the 56.51% price total return over the past year.
However, investors should be aware that Hilton is currently trading at a high earnings multiple, with a P/E ratio of 51.2. This valuation metric corresponds with Truist Securities' decision to maintain a Hold rating despite raising the price target.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Hilton Worldwide, providing deeper insights into the company's financial health and market position.
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