Compass Point Reiterates Hold on RLJ Lodging, Sets Price Target at $8.50

Compass Point analyst Kenneth Billingsley reiterated a Hold rating on RLJ Lodging with a price target of $8.50. Billingsley has a 52.38% success rate and an average return of -1.6%. RLJ Lodging has a market cap of $1.06B and a P/E ratio of 26.62. Oppenheimer maintained a Buy rating on RLJ Lodging on the same day.

RLJ Lodging Trust (RLJ) reported its financial results for the second quarter of 2025, surpassing earnings per share (EPS) expectations while experiencing a slight dip in revenue. The company posted an EPS of $0.15, exceeding the forecasted $0.11 by 36.36%. However, revenue came in slightly below expectations at $363.1 million, compared to the anticipated $364.62 million [1].

Following the earnings release, RLJ’s stock experienced a decline of 3.6% to close at $7.37, though pre-market trading showed a modest recovery of 0.54%. Despite the mixed financial results, the company maintained a healthy dividend yield of 8.14% and has consistently maintained dividend payments for 15 consecutive years [1].

Key Takeaways
- RLJ Lodging Trust exceeded EPS expectations by 36.36%.
- Revenue slightly missed forecasts, with a 0.42% shortfall.
- Stock price declined by 3.6% post-earnings but showed signs of recovery in pre-market trading.
- The company completed 7 hotel conversions, achieving a 10% RevPAR growth.
- Urban markets, particularly San Francisco, outperformed with a 20% RevPAR increase.

The company's strategic focus on urban areas and hotel conversions appears to be yielding positive results. Financial Highlights
- Revenue: $363.1 million, slightly below expectations.
- Earnings per share: $0.15, surpassing the forecast by 36.36%.
- Hotel EBITDA: $113 million with a margin of 31.1%.
- Adjusted EBITDA: $104 million.
- Adjusted FFO per diluted share: $0.48.

The EPS beat is significant, reflecting the company’s effective cost management and strategic focus on high-performing urban markets. Market Reaction
Following the earnings announcement, RLJ’s stock declined by 3.6%, closing at $7.37. The stock’s performance was within its 52-week range of $6.16 to $10.84. Pre-market trading indicated a slight recovery, with a 0.54% increase. The mixed financial results, with an EPS beat but revenue miss, likely contributed to the cautious investor sentiment [1].

Analysts' Views
Compass Point analyst Kenneth Billingsley reiterated a Hold rating on RLJ Lodging with a price target of $8.50. Billingsley has a 52.38% success rate and an average return of -1.6%. Oppenheimer maintained a Buy rating on RLJ Lodging on the same day [2].

Looking Ahead
RLJ anticipates a softer third quarter in 2025, with improvements expected in the fourth quarter due to favorable holiday shifts and stronger citywide calendars. The company projects a modest expense growth of around 2% and remains optimistic about 2026 fundamentals [1].

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-rlj-lodging-trust-q2-2025-beats-eps-expectations-93CH-4181210
[2] https://www.investing.com/analysis/analyst-views/