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Evercore upgrades Host Hotels; Mizuho lifts American Assets Trust, Brixmor


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Evercore upgrades Host Hotels; Mizuho lifts American Assets Trust, Brixmor


Evercore ISI analysts Rich Hightower and Steve Sakwa lifted Host Hotels & Resorts Inc. to "in-line" from "underperform" and raised the company's stock price target to $22 from $20 per share.

The analysts said they believe investors can better gauge the value of the company's individual hotels going forward after providing more financial information on its top 40 assets. The lodging real estate investment trust disclosed in its latest earnings release that it is acquiring three hotels in Hawaii, San Francisco and Florida for $1 billion, and that it sold an Arlington, Va., hotel for $190 million. It is also under contract to sell a New York City hotel for $190 million.

Host Hotels' solid results for the fourth quarter of 2017 and its rosy outlook for 2018 relative to its peers also should "give investors a sigh of relief," the pair said in a Feb. 21 note.

Mizuho Securities USA LLC analyst Haendel St. Juste upgraded diversified REIT American Assets Trust Inc. and shopping center REIT Brixmor Property Group Inc. to "buy" from "neutral," with per-share price targets on the companies' stocks of $35.50 and $17, respectively.

The analyst attributed American Assets' rating upgrade to the company's high-quality portfolio, above-average growth targets and possible catalysts for an earnings upside. For Brixmor, St. Juste argued that the company's stock trades at a deep discount relative to rival Kimco Realty Corp. and has better near-term clarity than peer DDR Corp.

More broadly, St. Juste updated his valuations and forecasts on strip center REITs and changed his view to "neutral" from "underweight," following the sector's year-to-date selloff triggered by rising interest rates and cap rates, store closures and other factors. "We now see a more balanced opportunity with discounted valuations, potential 2H18 / 2019 improved growth and macro retail tailwinds and potentially lower interest rates by YE18," the analyst said in a Feb. 22 note.