Host Hotels & Resorts (NASDAQ:HST) shares gained as much as 2.3% in Friday premarket trading after Compass Point upgraded the REIT to Buy from Neutral, calling it "the most liquid way to participate in the urban hotel recovery."
While HST has fared better than peers year-to-date, accelerating 8.7%, the stock is still trading at a 36% discount to estimated net asset value and at 8.6 times 2023 FFO, the firm wrote in a note. From a year ago, shares are off 12.9%.
The bullish coverage comes two days after the company topped first-quarter FFO per share and revenue expectations. In addition, it boosted its RevPAR growth guidance for the full year, calling for 7.5%-10.5% growth vs. 2.0%-8.0% in the prior view.
"Despite concerns that the recent share price jump captures the upside potential, we see continued upside from the company's urban and group focused portfolio in 2023," the note said. "The company continues to 'under-earn' as overall occupancy levels remain approximately 7% below pre COVID levels with urban occupancy even lower but recovering robustly."