Jefferies has officially downgraded Host Hotels & Resorts $HST from ‘Buy’ to ‘Hold’, lowering the price target from $20 to $14. The decision reflects growing unease around the company’s ability to navigate macroeconomic challenges and maintain profitability over the near term.
📌 Why the Downgrade Happened
🔻 Limited Economic Visibility – $HST management has been cautious, citing uncertainty around the broader economy, international inbound travel, and operational margins. That lack of clarity puts pressure on forward-looking performance estimates.
🔻 Revised Valuation Approach – Jefferies has recalibrated its valuation metrics using more conservative FY25/26 multiples, now forecasting 9.5x EV/EBITDA, 8.0x P/AFFO, and 10.0x P/FCFE—down from prior figures of 11x, 10x, and 12x respectively. This signals tempered expectations on future cash flow generation.
🔻 Market Already Pricing in Headwinds – Despite strategic moves like targeted acquisitions and property-level investment, $HST is currently trading at 8.6x estimated 2025 EV/EBITDA, suggesting investors have already baked in much of the anticipated softness in results.
📌 Dividend Snapshot
💸 $HST currently pays an annual dividend of $0.80 per share, yielding about 6.02%. However, the payout ratio sits north of 105%, signaling that dividend payments are exceeding current earnings—a yellow flag for sustainability. Investors seeking reliable income may need to weigh the risk of a potential adjustment if cash flows tighten further.
While Host Hotels has proven resilient in past cycles, Jefferies’ downgrade underscores a shift toward caution. With macro clouds hanging over the hospitality sector and internal earnings pressures mounting, $HST may need to prove its staying power before regaining investor favor.