(Updated with analyst comments and stock price movement.)
PARSIPPANY, N.J. (
saw its share price soar to a fresh 52-week high Tuesday, thanks in part a newly inked licensing deal with Planet Hollywood Hotels.
Shares of hotel operator
, before closing at $28.30, up 1.6% on the day.
"It's a small positive for Wyndham," FBR Capital Markets analyst C. Patrick Scholes told
. "This type of deal really fits quite naturally into what a franchise hotel model should be about."
The Parsippany, N.J.-based hotel and time share operator announced a license agreement with
Planet Hollywood Resorts International
to franchise the Planet Hollywood Hotels brand and manage those properties globally.
Wyndham will "offer developers the choice of various levels of entertainment-based concepts for hotel development opportunities based on hotel or resort size and geographic location," the company said.
"It's just another arrow in the quiver of growing their hotel franchise business," Scholes said. "Planet Hollywood gets to use Wyndham's existing brand, locations and expertise to help themselves grow; Wyndham is already established so it doesn't cost them incrementally more to do this."
"It's a nice win for WYN," the analyst mused.
Scholes does not expect the deal to be immediately accretive for Wyndham. Rather, he said, the upside is the implied symbolism that the market wants to use it as the expert.
Wyndham's stock is Scholes' top pick in the hotel sector. The analyst has an outperform rating on the hotelier's shares.
Other hotel stocks he considers a good investment include
Choice Hotels International
Starwood Hotels & Resorts Worldwide
. These are "excellent companies," he said, but do not have as much stock price upside as Wyndham, his favorite hotel stock pick. **
Hudson Securities analyst Robert LaFleur recently tapped Wyndham shares as his
as well, citing its strong cash flow generation and attractive valuation.
Wyndham's shares have grown more than 82% over the last year, and Standard & Poor's thinks the stock has gotten over its head and is overvalued.
is also cautious about the sharp run-up and has a hold rating on the stock, while
reported system-wide revPAR declined 1.2% last quarter, but sales momentum across the company's three business segments -- lodging, vacation rentals and vacation ownership -- helped push total revenues up 5% year-over-year to $963 million, easily beating expectations for sales of $940.2 million.
RevPAR, or revenue per available room -- a key financial metric in the hotel industry -- rose in June, the company said, and it continued to see "meaningful improvement" during the first three weeks of July. That strengthening led Wyndham to raise its revPAR expectations for 2010 to growth as much as 3%, compared with its previous estimates for flat or a 3% decline in revPAR.
Wyndham pays an annual dividend of 48 cents per share for a yield of 1.7%.
-- Written by Miriam Marcus Reimer in New York.
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