Will This Downgrade Hurt Hyatt (H) Stock Today?

NEW YORK (TheStreet) -- Hyatt (H) has been downgraded to "neutral," MKM Partners said Monday. the firm said the revision was a valuation call based on a $64 price target.  

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Separately, TheStreet Ratings team rates HYATT HOTELS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate HYATT HOTELS CORP (H) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues rose by 10.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 620.00% and other important driving factors, this stock has surged by 43.40% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 600.0% when compared to the same quarter one year prior, rising from $8.00 million to $56.00 million.
  • HYATT HOTELS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HYATT HOTELS CORP increased its bottom line by earning $1.30 versus $0.53 in the prior year. For the next year, the market is expecting a contraction of 15.3% in earnings ($1.10 versus $1.30).
  • The gross profit margin for HYATT HOTELS CORP is rather low; currently it is at 21.88%. Regardless of H's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.21% trails the industry average.

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