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Ahead of the Bell: Starwood Hotels

NEW YORK (AP) -- A Janney Capital Markets analyst on Monday upgraded Starwood Hotels & Resorts Worldwide Inc. to "Buy" from "Neutral," predicting that the company will get a boost from higher demand for hotel rooms this year.

Starwood operates hotel chains under the Sheraton, Westin, W Hotels and St. Regis brands.

Brian McGill also increased his fair value estimate for the shares by $12 to $67. He added that it's also possible that the Stamford, Conn.-based hotel company could take advantage of another round of asset sales and move closer to its goal of being asset light.

"Starwood shares have generally traded in the $50 to $60 range for the last two years and we have been on the sidelines, but we now think the shares are poised to outperform," McGill wrote in a note to investors.

The analyst noted that the mood was optimistic at an industry conference last week, with industry wide revenue per available room, or revpar, expected to increase between 5 percent and 6 percent this year in the U.S.

McGill said that with most of its holdings concentrated in the upscale to upper upscale segment, Starwood can do better than the overall industry and post a 7 percent increase in revpar for the year.

Starwood shares have risen steadily since mid-November, gaining about 20 percent.