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Evercore upgrades Marriott, Hyatt; Mizuho downgrades Healthcare Trust of America

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Evercore upgrades Marriott, Hyatt; Mizuho downgrades Healthcare Trust of America

Upgrade

Evercore ISI analysts upgraded hotel operators Marriott International Inc. and Hyatt Hotels Corp. to "in line" from "underperform," following Evercore's decision to make a "critical change" to the reference universe against which it compares prospective returns for its C-corp coverage universe.

In upgrading Marriott, the analysts lifted the per-share price target on the company's stock to $145 from $132 and said the company's updated accounting standard will negatively affect its 2018 operating income by $50 million, as compared to the previous accounting standard.

As for Hyatt, the analysts increased the price target to $84 per share from $66 per share, as their Hyatt model has more moving parts than any company Evercore has covered so far in the current earnings season. The analysts said that given Hyatt's current guidance for 2018, which does not reflect the new accounting standard, their financial forecasts for the year "actually sit below" the low end of current guidance.


National Securities analyst John Benda upgraded Bluerock Residential Growth REIT Inc. to "buy" from "neutral" and adjusted the per-share price target on the multifamily-focused residential real estate investment trust to $11.00 from $11.50.

The analyst noted that Bluerock has "radically transformed itself" over the past few quarters and has completed its management internalization, expanded into mezzanine loan financing, right-sized its dividend, and grown its operating portfolio, thus outlining solid adjusted funds from operations guidance for 2018.

Downgrade

Mizuho Securities USA LLC's Richard Anderson downgraded Healthcare Trust of America Inc. to "neutral" from "buy" and cut the per-share price target on the healthcare REIT's stock to $29 from $36.

Anderson said Healthcare Trust has not offered explicit guidance for 2018 FFO and has only suggested a "sideline" approach to acquisitions for the time being, with the possible exception of redeploying up to $100 million of sale proceeds.

The analyst also noted that in-house property management allows Healthcare Trust to conduct those services at a lower cost, resulting in quarterly volatility in same-store components which leads to "very low standard deviation" at the net operating income line.

Anderson added that medical office buildings have been Mizuho's healthcare REIT "hiding place," but it sees stock market dislocation as an opportunity to reassess for MOBs and the REIT sector overall.


BMO Capital Markets analyst Heather Kirk downgraded Canadian REIT to "market perform" from "outperform" and raised the per-share target price on the company's stock to C$53.60 from C$52.00.

The analyst said the initial reaction to Canadian REIT's potential merger with Choice Properties Real Estate Investment Trust has been mixed, as investors "mourn the loss of a REIT with coveted characteristics," such as a top-tier management team, low payout ratio, low leverage, high free cash flow, and consistent net asset value and FFO growth.

"While we understand the angst and concerns over a greater weighting to retail, we believe that ... Choice can become CREIT 2.0, levering off a stable portfolio base, significant intensification potential and lower leverage and payout ratio over time," Kirk added.