Jefferies downgraded Choice Hotels (CHH) to Underperform from Hold with a price target of $96, down from $119. The analyst cites the company’s “hostile pursuit” of Wyndham Hotels & Resorts (WH) for the downgrade. The firm believes the proposed deal presents regulatory, strategic, as well as financial risks. The combined entity would have outsized presence in the economy and midscale segments which should lead to prolonged antitrust investigation, the analyst tells investors in a research note. The firm says Wyndham is not consistent with Choice’s stated strategic direction towards growing into higher-priced segments of the markets.
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