Ahead of the Bell: Baird downgrades Host Hotels

Baird downgrades Host Hotels, saying lodging recovery is going to take longer than expected

• On 9:29 am EDT, Thursday October 15, 2009

NEW YORK (AP) -- Shares of Host Hotels & Resorts Inc. dropped Thursday after a Baird analyst cut his rating on the lodging real estate investment trust, cautioning investors that a recovery in the hotel sector is further away than a recent rally in Host's shares suggests.

Host on Wednesday posted third-quarter results that topped analysts' expectations and slightly raised its outlook for the year. But in a note to investors, analyst David Loeb said he thinks a recovery in the lodging sector is going to take longer and be weaker than most analysts expect.

The Bethesda, Md., company said Wednesday that it expects a decline in revenue per available room -- or revpar, an important industry measure -- of between 20 percent and 22 percent this year.

The company also forecast weakness through the first half of next year, Loeb wrote.

He added that he is cautious about how soon Host will be able to buy up distressed properties, which would benefit the REIT.

Loeb cut Host to "Underperform" from "Neutral." Host shares slid 43 cents, or 3.5 percent, to $11.70 in premarket activity. The stock has traded between $3.08 and $12.20 in the past 12 months, and its price has nearly quadrupled since March lows.