Wyndham Hotels & Resorts (WH), Hyatt Hotels (H) and Travel + Leisure (TNL) are among top picks as an expectation of broad-based Q2 earnings beats and higher full-year guidance support upside in the lodging sector even after World Cup-related demand subsides, Morgan Stanley said in a Friday note.
Morgan Stanley said accelerating US revenue per available room trends offset weaker conditions in China and the Middle East. The firm added upside could extend into the second half if recent two-year RevPAR trends hold.
Wyndham offers easier comparisons beyond the World Cup and trades at a discounted valuation, while Hyatt should continue benefiting from strength in group and business travel while trading below larger peers, analysts noted.
The firm also raised estimates across much of its lodging coverage to reflect stronger RevPAR trends and forward indicators pointing to sustained demand.
Morgan Stanley maintained Overweight ratings on Wyndham Hotels & Resorts, Hyatt Hotels and Travel + Leisure, while raising their price targets to $93 from $89, $218 from $208 and $83 from $78, respectively.

