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Analyst downgrades Starwood on slow global economy

Tuesday, 2 Oct 2012 | 3:41 PM ET

NEW YORK -- An analyst cut his rating on shares of Starwood Hotels & Resorts Worldwide Inc. on Tuesday because of the weaker global economy.

Raymond James' William Crow lowered his rating to "Outperform" from "Strong Buy" for the operator of the Sheraton, Westin, W and St. Regis hotel chains.

He recommends investors tread lightly because of uncertainty about the U.S. economy, lowered growth expectations in China and weakness in Europe. He said that revenue per available room, or revpar, growth appears weaker than expected in the U.S. in the third quarter. The metric is a key gauge of a hotel operator's performance.

Crow lowered his earnings estimates for the Stamford, Conn., company's third quarter, and for full-year results through 2014. He cut his price target to $64 from $68.

Still, he believes Starwood is well-positioned to benefit over the long term from a growing middle class in Asia and South America. He notes that the stock is still one of his top picks in the long term, but for now it's too expensive to be among the best buys for investors.

Shares had risen 20 percent in 2012 and 48 percent in the past 12 months, hitting a year high of $61.09 on Sept. 14. Shares shed 89 cents, or 1.5 percent, to $56.61 in late afternoon trading Tuesday.

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