2023-05-24 12:29:49 ET
Wyndham Hotels & Resorts ( NYSE: WH ) was sized up by Wall Street analysts on Wednesday following a report indicating Choice Hotels ( NYSE: CHH ) has an interest in making an acquisition.
For starters, Truist analyst Patrick Scholes said the firm does not think there is high likelihood this merger would transpire for several reasons.
Jefferies analyst David Katz also called aspects of the potential combination challenging. He noted that while the increased hotel scale could be positive, a high concentration in the economy segment would raise some debate on the rationale. "Further, CHH mgt. has intended to grow up-market, which is inconsistent with acquiring WH. However, the valuation spread between CHH and WH is opportune at ~4X EBITDA, and WH has been persistently undervalued, in our view," he added.
Bank of America analyst Shaun Kelley is a bit more positive and thinks the math could work out. He said a deal would be materially accretive to Choice ( CHH ) at a premium above WH’s current price. Kelley's big takeaway is that regardless of whether or not a deal does or does not occur, the interest is noted to highlight Wyndham ( WH ) as an undervalued franchisor and is an indication of the optionality potential inherent in Choice’s ( CHH ) balance sheet. BofA reiterated a Buy rating on WH and CHH following the report.
Meanwhile, Baird analyst Michael Bellisario wrote that Wyndham ( WH ) was just put in play due to the report. A $80 to $90 share price was called a reasonable range for a deal to be struck by CHH or another entity.
Shares of Wyndham Hotels & Resorts ( WH ) poked out a 1.45% gain in early afternoon action on Wednesday to $70.06 to follow on Tuesday's big rally .
More on Wyndham Hotels & Resorts:
- Wyndham Q1 Earnings: No Signs Of Slowdown
- More articles from Seeking Alpha analysts
- Growth metrics on Wyndham Hotels & Resorts
- Seeking Alpha's Quant Rating for Wyndham Hotels & Resorts
For further details see:
Wyndham Hotels is said to be in play whether or not Choice Hotels makes a bid