Meristar Hotels & Resorts (MMH) Message Board

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Strategies & Market Trends : Meristar Hotels & Resorts (MMH)

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To: professor who wrote ()	1/28/2000 2:40:00 PM
From: professor	Read Replies (1) of 21

Deutsche Banc Alex Brown upgrading MMH to a STRONG BUY. It is very positive. They have a $6 price target based on a 30 cent eps estimate and 9X the $28.4 million EBITDA for year 2000. He cites the REIT Modernization Act as "dramatically" altering the risk profile of the company's future income as a major reason for the upgrade. The current long term leases will be converted into management agreements by January 1, 2001 when the Act is effective. He says that investors will begin anticipating the "higher quality/lower beta income stream" and place a higher p/e multiple on earnings. He also reiterates that Meristar has an excellent "platform to compete on a larger scale than its balance sheet would indicate." Meristar has a "large company infrastructure" relative to larger capitalization branded companies even though its own market capitalization is roughly $100 million. He also mentions strong growth in third party management contracts, developing internet and E-commerce strategy, resort management opporutnities, expanding Doral name, the high quality portfolio of properties, seasoned management as major strengths of the company.

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