Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of DiamondRock Hospitality Company Are Rising Today

By Bram Berkowitz - Feb 26, 2021 at 5:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Deutsche Bank recently upgraded its price target on the real estate investment trust.

What happened

Shares of DiamondRock Hospitality (DRH -2.32%) traded more than 9% higher in the final hour of trading on Friday after analysts at Deutsche Bank raised their price target on the real estate investment trust (REIT).

So what

Deutsche Bank analyst Chris Woronka maintained a hold rating on the stock and raised his price target on the company from $10.22 per share to $11 per share, representing a 7.63% increase.

REITs tend to own different kinds of commercial real estate including, but not limited to, office buildings, shopping centers, hospitals, retail stores, and hotels.

Line with arrow gradually rising on chart.

Image source: Getty Images.

Due to the pandemic shutting down broad swathes of the economy, many REITs struggled in 2020. DiamondRock Hospitality was no exception; it owns 31 premium hotels and resorts in the hard-hit lodging sector.

In March of 2020, DiamondRock, seeing its shares tank all the way down into the $2 range, suspended its dividend. But the company has since rebounded nicely on vaccine news and the potential to return to a somewhat normal life and economy.

Now what

Recently, DiamondRock reported a $208 million loss for the fourth quarter of 2020, down from a nearly $135 million profit in 2019. For the full year, the company reported a $396 million loss after reporting a $184 million profit in 2019.

While the worst may be over, DiamondRock currently only trades about 6% down from where it started 2020, so some of the recovery may already be priced in.

Additionally, it could still take some time for people to feel safe going to hotels and resorts again. Current vaccines may also not be able to ward off mutations of the coronavirus right away, further delaying the recovery. Investors should proceed with caution before buying the stock, recently trading around $10.22 per share. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DiamondRock Hospitality Company Stock Quote
DiamondRock Hospitality Company
$10.09 (-2.32%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.