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JPMorgan cools on Extended Stay America

  • JPMorgan lowers Extended Stay America (NASDAQ:STAY) to a Neutral rating from Overweight on its view that catalysts have disappeared following the board announcement on stopping a review of corporate structure alternatives.
  • "Share buybacks and growing a relatively small, though not needle-moving franchise business, aren’t all that exciting to us and aren’t things that we see as driving a higher valuation multiple," notes analyst Joseph Greff.
  • JP establishes a December 2020 price target of $15 (9.5X PropCo/11X OpCo 2021E EV/EBITDA). "Valuation remains fair here at 8.6X 2019E EV/EBITDA and 9.0X 2020E EV/EBITDA, in our view," writes Greff. The consensus sell-side PT is $16.96.

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Extended Stay America, Inc.