Hilton Reports Worse Than Expected Losses for Q2

Analyst David Katz doesn't see the stock taking a major hit despite the disappointing results.
Anthony RussoAug 06,2020,18:40

Hilton Worldwide Holdings Inc. (NYSE: HLT) reported Thursday a quarterly loss of nearly double than expected for the second quarter.

One of the largest global hotel chains said in a statement today that its adjusted loss in the second quarter was 61 cents a share, missing the 31 cents mark analysts polled by FactSet were calling for. Revenue tumbled 77% year-over-year to $564 million, which missed estimates by more than 30%. 

The big miss today shows that analysts may have been too bullish reopenings, as people haven’t felt safe enough to travel to Disney World and stay in a Hilton. And unlike Disney (NYSE: DIS), Hilton doesn't have streaming service with exclusive rights to Star Wars. Hilton is one of those old-fashioned businesses we used to frequent before the pandemic. You know, one where customers actually have to show up in person for the company to make a buck. 

Despite the poor results, Jefferies’s analyst David Katz doesn’t expect Hilton to get hammered on the news.

As cited by Barron’s, he wrote in a note prior to the company’s scheduled conference call today, “despite the lower-than-expected results, we expect a neutral reaction to the results, based on the strong pipeline and liquidity position."

Katz has a hold rating on the stock.

Intraday, the stock in Hilton was trading 15 cents higher from Wednesday’s close at $80.15 per share. The company has traded at a low of $78.06 per share and a high of $80.97 per share today. Today’s high also represented a three-week high for Hilton.

Turning to some good news today, Hilton’s occupancy levels in the U.S. and Asia Pacific regions rose roughly 20 and 15% respectively. As of July 31, 96% of Hilton's hotel rooms were open. Its development pipeline at the end of the quarter grew by 11% to 414,000 rooms, an increase of 11% from June 30, 2019.
As of June, it had cash and cash equivalents of $3.57 billion with $10.6 billion in long-term debt. 

Shares of Hilton are down nearly 28% year-to-date.

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