Mizuho Securities initiated coverage of Choice Hotels International Inc. (NYSE: CHH) on Thursday with a neutral rating, assigning a price target of $106 per share.
The stock last traded at $109.86, slightly above Mizuho’s target, after closing at $111.12 on Aug. 24. The firm’s valuation is based on an EV/EBITDA multiple of 10x, applied to Choice Hotels’ projected earnings, compared with the company’s current trading multiple of 14.4x.
Analyst Ben Chaiken highlighted Choice Hotels’ 1.5% net room growth projected for 2026 as the strongest in several years, within the company’s historical range of 0–2%. Long-term growth is modeled at 1–2%, aligning with lodging industry algorithms. RevPAR growth is similarly expected to remain modest, consistent with historical lodging trends.
Choice Hotels reported adjusted EPS of $2.02 for the second quarter, exceeding Wall Street estimates of $1.96, while revenue reached $441 million against a forecast of $429.71 million. The company raised its full-year outlook, citing improvements in room growth, royalty rates, and its development pipeline.
U.S. hotel RevPAR rose 8.2% year-over-year in July, according to Barclays data, driven by a 2.3% increase in occupancy and a 5.7% rise in average daily rates. The luxury segment led gains with a 17.7% RevPAR increase, while the economy segment saw a 3.6% rise, up from 3.1% in June.
Mizuho’s target multiple of 10x EBITDA reflects a C-corporation lodging algorithm of 1–2%, compared with the broader market’s higher valuation. Short interest in Choice Hotels is estimated at 30% of the float.
The initiation follows broader travel trends, including references to events such as the World Cup and America250, though no direct correlation to Choice Hotels’ valuation was provided.
