The hotel industry may not offer a plethora of hot stocks, but Hilton Worldwide Holdings is making some noise on Wall Street. Today's selection for IBD 50 Stocks to Watch, Hilton was flirting with a buy point Tuesday as the company looks to expand its chain of hotels in new areas.
Hilton stock has been charging higher since October, when the hospitality icon reported a 27% gain in third-quarter earnings. Shares broke out of a flat base with a trigger of 157.14 and kept climbing until they hit a high of 215.79 on March 28. Along the way, Hilton stock formed several three-weeks-tight patterns.
The stock retreated after reaching its peak to form a second-stage flat base, with the 215.79 apex serving as the new buy point. Hilton stock briefly ventured into the buy zone Tuesday but pulled back slightly to hover just below it at midday.
Hilton ranks second to Marriott International in IBD's Leisure-Lodging industry group. The group ranks 111th out of 197.
Hilton operates 7,600 properties with 1.2 million rooms in 126 countries. There are 24 brands under the Hilton Hotels banner, such as Waldorf Astoria, Embassy Suites, DoubleTree and Homewood Suites.
Hilton Hotels: Moving Deeper Into 'Lifestyle' Properties
Earlier this month, Hilton announced it plans to double its presence in what is known as "lifestyle" hotels over the next four years, going from 350 properties in that realm to 700 by 2028. A lifestyle property is similar to a boutique hotel in that it offers a more personalized, unique experience, but is considered affordable like a chain hotel.
In March, Hilton acquired the Graduate Hotels brand, a series of 35 themed properties based on or near college campuses. They include the University of Michigan, Stanford University, Pennsylvania State University and the University of Tennessee. It also has operations at Oxford and Cambridge in the U.K.
Hilton thinks it is only scratching the surface of the brand's potential.
"With thousands of colleges and universities around the world, we believe the addressable market for the Graduate brand is 400-500 hotels globally," Hilton Chief Executive Chris Nassetta said in a news release announcing the deal.
Other lifestyle brands now with the Hilton Hotels chain include Canopy, Curio Collection, NoMad, Motto, Tapestry Collection and Tempo.
Earnings Give A Lift To Hilton Stock
On April 24, Hilton reported adjusted first-quarter earnings of $1.53 a share, a 23% gain vs. the year-earlier period. Earnings came in 12 cents ahead of analyst estimates. Its revenue per available room, known in the industry as RevPAR, increased 2%, below estimates.
Hilton stock jumped nearly 4% on the news. It has retreated since then but remained in its flat base.
Truist Securites analyst C. Patrick Scholes raised his target price on Hilton shares to 209 from 199. He did, however, keep a hold rating on the stock, according to TheFly.com. Scholes noted that Hilton reported "powerful" earnings growth, though he added that RevPAR was choppy.
But Daniel Politzer, analyst at Wells Fargo Securities, maintained his equal-weight rating on Hilton Hotels stock. He also kept his price target at 200.
"(Hilton) has an impressive fee-based business model with multiple growth drivers and a well-respected management team with a strong track record," Politzer said in a note to clients at the time. He added: "But we think these positives are reflected in the stock's valuation."
