Citi downgrades Playa Hotels to Neutral on near-term concerns

Citi downgraded Playa Hotels & Resorts to Neutral from Buy with a price target of $8, down from $12. The company’s positives, which include an attractive valuation, slightly lowered interest expense, robust share repurchase program, and a high quality collection of resorts, are offset by greater than expected construction disruption through the balance of 2024 and a likely longer recovery period post construction at Cabo properties, the analyst tells investors in a research note. The firm also sees continued weak demand to Jamaica, compounded by a State Department advisory and competition from new supply. As such, Citi views Playa’s risk/reward as balanced at current share levels.