Pro Analysis

Goldman makes Hilton a favorite pick, sees shares jumping more than 30%

Guests stand outside of a Hilton hotel in San Francisco, Feb. 16, 2015.
David Paul Morris | Bloomberg | Getty Images
Guests stand outside of a Hilton hotel in San Francisco, Feb. 16, 2015.

Investors should buy Hilton Worldwide shares, because its earnings will come in above expectations in the coming years, according to Goldman Sachs, which reiterated its buy rating on the company and added the hotel chain to its conviction buy list.

"We believe the company's solid free cash flow, ROIC [return on invested capital], and capital allocation story are still underappreciated. As such, the upcoming releases should act as positive catalysts for the stock as these positive aspects are surfaced and drive upside to consensus estimates," analyst Stephen Grambling wrote in a note to clients Sunday. "We believe the company still has capacity to take on additional leverage to repurchase stock."