New York, New York--(BUSINESS WIRE)--Dec. 4, 2000--Bear Stearns Senior Managing Director and Lodging Analyst Jason Ader, in response to growing weakness in the US economy, downgraded the lodging sector today. Citing a clear correlation between the economy and the lodging industry, Ader lowered his rating on six prominent lodging stocks. There seems to be little doubt that the economy is slowing, said Ader. And history has shown that when the economy suffers, so do hotels. While Ader notes that an economic slowdown has already been incorporated into some of the stock prices, he believes the downturn could be worse than anticipated. In addition, further speculation that the risk of a recession is increasing will further depress the sector. Slowing economic trends could be enough to instill fear into investors and drive multiples lower, concluded Ader.
The Bear Stearns analyst downgraded the following stocks:
- Marriott International (MAR) was downgraded to Neutral from Buy.
- Hilton Hotels Corp. (HLT) was downgraded to Neutral from Buy.
- Starwood Hotels and Resorts (HOT) was downgraded to Attractive from Buy.
- MeriStar Hospitality (MHX) was downgraded to Attractive from Buy.
- Extended Stay America (ESA) was downgraded to Attractive from Buy.
- Four Seasons (FS) was downgraded to Neutral from Attractive.
Better Early than Late
In January, when Ader upgraded the lodging sector, he cautioned investors that the call may be a bit premature and, in fact, it was, as stocks drifted downward for a period before rising. In the end, however, investors enjoyed a healthy increase in the sector; large-cap lodging stocks are up more than 25% year to date. This time the results could be similar. We believe this call may also be a bit early, but we believe in this situation it is much better to be the first one to react to a downturn than the last, commented Ader.
Not a Total Disaster
While a continued deterioration in the economic sector has brought about pessimism, the Bear Stearns analyst is by no means predicting a cataclysmic downturn in the lodging industry. In fact, the analyst believes the industry is better positioned to weather a downturn than it was during the last major economic slowdown in the early 1990s. Investors shouldn't lose faith in the lodging industry, said Ader. There are a number of strong companies that will thrive in good economic times. It's just that this is probably a good time to take a breather.
For More Information
To obtain the full lodging analysis or to speak with Jason Ader, members of the press can contact Laura Conover at 212-272-8768 or Russell Sherman at 212-272-5219.
Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $24.8 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer clearing services, including securities lending. Headquartered in New York City, the company has more than 11,000 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles, San Francisco and San Juan; and an international presence in Beijing, Buenos Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Seoul, Shanghai, Singapore and Tokyo. For additional information about Bear Stearns, please visit the firm's Web site at http://www.bearstearns.com.
CONTACT: Bear, Stearns & Co. Inc., New York
Media Contact:
Russell Sherman, 212/272-5219
RussellSherman@bear.com
|
Post Release
Get Content
Email News Brief
Saved Articles
Advertising
Handheld
XML/RSS
Post News