Hilton Worldwide Holdings Inc. (HLT) stock has suffered starting in March and April due to the coronavirus pandemic. Still, Hilton was added to the WhaleWisdom Index on August 17, 2020, despite the stock falling roughly 21.2% on the year. It is a steep loss for the shares, while the S&P 500 has outperformed, gaining approximately 3.4%.
Hilton owns hotels, resorts, and timeshare properties throughout the world. The pandemic caused a downturn in travel and restrictions on group gatherings that greatly impacted Hilton’s business, from individual hotel and wedding venue bookings to corporate conferences. The pandemic has had a negative impact on Hilton’s financial performance and the hospitality industry as a whole.
Hedge Funds Are Buying
Hedge funds were active in the second quarter, and the aggregate 13F shares held rose to about 93.9 million from 90.6 million, an increase of approximately 3.6%. Reviewing hedge fund activity, 40 created new positions, 39 added to existing holdings, 29 exited, and 32 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 0.6%, to approximately 273.8 million from 275.6 million.
Encouraging Estimates Beyond 2020
Analysts estimate that Hilton’s revenue will plunge in 2020 by approximately 48%. Fortunately, revenue is forecast to rebound in 2021 by 55.8% to $7.66 billion and an additional 19.9% in 2022. Meanwhile, earnings are forecast to drop 92% in 2020 to $0.32 per share and then jump to $2.36 in 2021 and $3.58 in 2022.
Analysts like UBS Investment Bank are optimistic about the stock, keeping a Buy rating and giving Hilton a price target of $104. Additionally, PIMCO Investment Management’s chief investment officer (CIO) also has a positive attitude towards companies like Hilton, as they believe the travel and tourism sector will ride out the pandemic.
Hope for Hilton
Hilton’s long-term earnings growth and future estimates are encouraging for investors, with optimistic analysts anticipating a rebound from the pandemic within two to three years. While this does not eliminate the uncertainty of the pandemic’s end and the dark cloud it created over the hospitality industry, there’s hope for this hospitality giant after a rough start to the year.
If the industry can recover as many analysts expect, then hedge funds may find themselves on the winning side of this trade.