Wyndham’s 3Q Sales Plunge 40%; Street Says Buy

Wyndham Hotels & Resorts’ 3Q revenues plunged 40% year-over-year to $337 million and came below the Street consensus of $366.6 million. The hotel chain’s 3Q earnings of $0.36 per share slumped over 67% year-over-year but came ahead of analysts’ estimates of $0.34.

Wyndham (WH) announced that excluding cost-reimbursement revenues, 3Q revenues dropped due to a 35% decline in global comparable RevPAR (revenue per available room) and the closure of hotels due to COVID-19.

Meanwhile, its CEO Geoffrey A. Ballotti said “RevPAR improved sequentially across the globe, and in the U.S., our economy and midscale brands continued to gain market share. Third quarter room openings also improved sequentially both in the U.S. and internationally and we grew our pipeline by 3% to 185,000 rooms globally.” (See WH stock analysis on TipRanks).

Following the 3Q results, Oppenheimer analyst Ian Zaffino maintained a Buy rating with a price target of $55 (17.1% upside potential) on the stock, as he believes that “the recovery continues to gain momentum.” Zaffino said that “RevPar and occupancy continue to improve sequentially since the April trough; nearly all of its portfolio is now open. Meanwhile, the company continues to generate meaningful FCF [free cash flow]—e.g., $102M adjusted FCF in 3Q20—which can be used to pay and grow its dividend or resume repurchases once credit agreement restrictions lift.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 7 unanimous Buys. The average price target of $58.83 implies upside potential of about 25.3% to current levels. Shares are down by 25.2% year-to-date.