JP Morgan Cuts Starwood Hotels to 'Long-Term Buy'

Analyst Harry Curtis sees underperformance at its Sheraton brand

JP Morgan cut Starwood Hotels (HOT ) to long-term buy from buy.

Analyst Harry Curtis says he downgraded because the outlook for lower RevPAR and EBITDA growth in 2003 reduces the upside in Starwood to about 10%. Curtis thinks Starwood's estimates have greatest risk due to more optimistic guidance from management and underperformance at its Sheraton brand.

He cut the $292 million third quarter EBITDA estimate to $283 million, due mostly to RevPAR contraction and lower margins. He thinks improvement in lodging demand is likely to improve in six months, after corporate profits show real growth and industry supply declines to less than 1%. Curtis also cut his $1.55 2003 earnings per share estimate to $1.37, and cut the $1.289 billion EBITDA to $1.24 billion.

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