Host Hotels May Accommodate Investors With Luxurious Earnings, Dividend Increases

Shares of Host Hotels and Resorts Inc (NYSE: HST) are expected to benefit from higher earnings, share repurchases and dividend hikes in the coming quarters, Argus’s Jacob Kilstein said in a report. He maintained a Buy rating on the company, while raising the price target from $19 to $21.

Host Hotels had reported its 2Q16 adjusted FFO at $0.49 per share, in-line with expectations and up 7 percent from 2Q15. “The higher FFO reflected operational improvement, lower interest expense, and the impact of share repurchases,” analyst Kilstein mentioned.

Revenue came in at $1.46 billion, marginally short of the consensus expectation of $1.47 billion and up 1 percent y/y. Management reduced its 2016 adjusted FFO guidance from $1.65-$1.69 per share to $1.63-$1.67 per share.

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Returns To Shareholders

Host Hotels announced plans to sell less than $1 billion of property assets this year. The company would instead use the proceeds to issue a special dividend, repurchase shares, and pay off debt, Kilstein noted.

The analyst added that the company has $162 million remaining on its current buyback authorization, which began in October 2015 and that the special dividend being planned would come from $800 million in hotel sale proceeds by the end of the year.

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