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Playa Hotels & Resorts N.V. (NASDAQ:PLYA) fell in early trading on Monday after Bank of America moved straight to an Underperform rating on the leisure stock after having it slotted with a Buy rating.
Following a long period of the Caribbean being one of the largest COVID beneficiaries in the leisure sector, analyst Shaun Kelley and team now see risks from softening demand trends and shifts to other tourism markets. Playa (PLYA) is also noted to have higher operating leverage than asset-light lodging and travel peers.
Other factors that are seen as potentially working against PLYA in the near term include price normalization, supply growth, and seasonality with an active hurricane season in the forecast.
BofA assigned a new price objective of $8 vs. $10 prior. The price objective reflects a 9X 2024 EV/EBITDA multiple off an estimate for lower, normalized earnings of $235M in 2024.
Shares of PLYA were down 5.36% to $8.12 at 10:51 a.m. The leisure stock is still up more than 25% for 2023.
