Hilton Stock Rallies On Ackman Stake, Upgrade

Shorts have been piling on, but most analysts are upbeat

Managing Editor
Oct 25, 2018 at 10:03 AM
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The shares of Hilton Hotels Corporation (NYSE:HLT) are up 1.9% to trade at $66.92, after Bill Ackman's Pershing Square Capital Management unveiled a 3.7% stake in the hotel operator. This follows yesterday morning's mixed earnings results, in which Hilton reported a third-quarter profit beat, but lowered the top end of its 2018 RevPAR growth target on U.S.-China trade concerns.

HLT traders are also digesting a flurry of analyst attention that rolled in overnight. While B. Riley upgraded Hilton stock to "buy" from "neutral," it joined no fewer than six other brokerages in cutting their price targets. The lowest outlook came from Jefferies and Cowen and Company, which trimmed their HLT target prices to to $74 from $91. 

It's been a rough fall, literally, for Hilton Hotels stock. Prior to today, HLT had turned in only four positive sessions in October, and is still headed for its fifth straight weekly loss. The shares fell to an annual low of $63.76 yesterday after earnings. Even without the news today, the equity may have been due for a bounce, with its 14-day Relative Strength Index (RSI) closing last night at 18 -- deep in oversold territory. 

Short sellers have been piling on HLT, which has likely exacerbated losses for HLT. Short interest increased by 30.5% in the last two reporting periods to 8.22 million shares, the most since mid-July. This only represents a meager 2.8% of the stock's total available float, though.

Analyst sentiment remains rather upbeat, with the vast majority of analysts in coverage maintaining a "buy" or better rating on Hilton stock. Plus, HLT's consensus 12-month price target sits all the way up at $85.39, a 27.6% premium to current trading levels.

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