PK - Park Hotels & Resorts cut to Market Perform at BMO on portfolio composition

Park Hotels & Resorts ( NYSE: PK ) shares slipped 1% in Tuesday premarket trading after BMO Capital Markets analyst Ari Klein downgraded the REIT to Market Perform from Outperform as the composition of its portfolio, albeit recovering, is expected to experience uncertainty.

The REIT's portfolio composition consists of a collection of big-box hotels in urban gateway markets "that is likely to lag and faces more uncertainty (on recovery and value) than most," Klein wrote in a note to clients.

"While we like the Hawaii exposure and PK is taking steps to lower leverage coupled with investments potentially helping unlock embedded value in the portfolio, these likely take time," he added.

The company's stronger-than-feared Q2 earnings , meanwhile, revealed an improvement from year-ago levels. Adjusted hotel EBITDA surged 134.2% Y/Y to $207M on a pro-forma basis, highlighting a recovery in demand.

"We witnessed exceptionally strong performance across our portfolio as the ongoing strength in leisure was augmented by increased business travel, which came in at 95% of 2019 levels and accelerating group demand," Park Hotels & Resorts CEO Tom Baltimore said during his company's Q2 earnings call .

BMO's Market Perform rating agrees with the Quant and average Wall Street analysts' Hold.

Previously, (June 5) Hotel REITs get a boost from business travel revival .

For further details see: