Citi Reiterates Neutral Rating on Diamondrock Hospitality (DRH)

Citi analyst Nick Joseph reiterated a Neutral rating and $9.00 price target on Diamondrock Hospitality (NYSE: DRH).

The analyst comments "From a strategic perspective, DRH will continue to tighten its approach to capital investment, noting that a one-point reduction in capital investment (as a percent of revenue) equates to about $10-$15M of incremental cash. Likewise, moving away from brand flags and/or management can drive better hotel-level profits. For instance, management noted that a 12-15% reduction in RevPAR at its now-independent Dagny hotel in Boston (formerly Hilton), would drive equivalent profits (so, assuming a less steep decline should drive better profits). In addition, resort markets – particularly those outside of top 25 destinations – remain a focus given very limited supply growth. Also, the company noted it was able to better manage property insurance costs by separating the portfolio into two baskets of higher and lower-risk assets."

For an analyst ratings summary and ratings history on Diamondrock Hospitality click here. For more ratings news on Diamondrock Hospitality click here.

Shares of Diamondrock Hospitality closed at $8.85 yesterday.

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