The recent move that hotel operator Choice Hotels (NYSE:CHH) made is drawing attention in Congress. It’s looking to take over Wyndham Hotels (NYSE:WH), and–as has been the case with a lot of mergers lately–has left a sour taste in representatives’ mouths. This latest government pushback is weighing on Choice Hotels, as it’s down fractionally in Thursday afternoon’s trading.
The latest move has drawn familiar ire, as Sen. Elizabeth Warren (D-MA) called on the Federal Trade Commission to once more investigate another piece of merger and acquisition activity. This time, Warren asserts, allowing Choice to buy out Wyndham without government resistance will result in less choice for travelers and “…higher hotel rates for customers across the country.”
Warren threw her hat in this particular ring after Choice attempted a hostile takeover of Wyndham. The company nominated eight members to Wyndham’s board of directors after making an $8 billion offer to buy Wyndham outright.
A Flawed Premise
Granted, Warren has a point. If Choice were to buy Wyndham, the takeover would ultimately make Choice the single biggest hotel chain in the United States. However, that’s where the threat kind of boils off into a big cloud of nothing. Both Choice and Wyndham appear on a list of the top 10 hotel brands. That means there are eight other brands out there besides Choice and Wyndham, with each controlling a substantial array of sub-brands.
Is Choice Hotels Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on CHH stock based on two Buys, three Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 8.31% loss in its share price over the past year, the average CHH price target of $125.29 per share implies 12.03% upside potential.
