Choice Hotels upgraded at J.P. Morgan on potential room growth

Choice Hotels International Inc. was upgraded to neutral from underweight at J.P. Morgan on the assumption that the company will add a significant of number rooms. J.P. Morgan raised the price target to $46 from $43. Choice Hotels had 720 hotels in the pipeline at the end of the fourth quarter, up from 638 hotels at the end of the third quarter, J.P. Morgan wrote in a Friday note. The domestic new contruction pipeline is up 22% year-over-year, led by the Comfort and Cambria brands. "[W]e believe Choice Hotels is at a point where it can sustain positive, low-single-digit growth," analysts wrote. The company reported fourth-quarter earnings of 51 cents per share on Thursday, topping the FactSet estimate of 47 cents. Revenue of $211 million also exceeded the FactSet estimate of $195 million. Choice said it sees earnings for the first quarter of at least 38 cents per share, just below the 39 cents FactSet estimate. The company sees full-year 2016 earnings between $2.30 and $2.36, also below the FactSet estimate of $2.38. Choice shares are inactive in premarket trading and down 20.6% over the past year. The S&P 500 is down 8.6% over the past 12 months.

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