Deutsche Bank downgraded Felcor Lodging (FCH) to hold from buy.
Analyst Marc Falcone says while most of Felcor's 138 hotels are in the upper upscale segment, its portfolio has underperformed that overall segment. Falcone thinks Felcor's mix of suburban hotels and weak markets is clearly taking its toll. Despite the company's announcement that it will pay a 15-cent fourth quarter dividend, Falcone says he's increasingly concerned about the company's ability to maintain this payout. He notes the attractive 5% current yield that Felcor shares are paying was the primary support of his buy rating.
Falcone cut his $1.78 2002 earnings per share estimate to $1.74, and trimmed the $1.76 2003 estimate to $1.72.