Wells Fargo analyst Dori Kesten downgraded Choice Hotels to Equal Weight from Overweight with a price target of $155, up from $135. The analyst believes “greater operational upside potential” exists over the next 12 months for Hyatt (H) versus Choice given Hyatt’s weighting toward higher end hotels and corporate travelers. Further, the shares of Hyatt are currently more compelling from a valuation standpoint, Kesten tells investors in a research note. While Choice’s low leverage should provide the company with the flexibility to return capital to shareholders in the near term and/or to acquire opportunistically, names with greater exposure to full-service, higher-end hotels and to corporate demand are more likely to outperform their peers over the next 12 months, says the analyst.
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