A Corporate Communications Corp. Publication ---- All Rights Reserved
June 15, 2004
Prime Hospitality Corp (NYSE) PDQ $10.08
52-week range $5.89-11.90
Market Cap $456.48M
Shares Outstanding 44.97M
Book Value $15.12
Price/Book 0.67
Average Daily Vol. 230K
Target Price $13.00
Target Percentage 29%
Prime Hospitality Corp. is an owner and franchiser of 172 hotels. In addition, the company manages and operates 73 hotels for third parties such as REITs. From a geographical perspective, the majority of Prime Hospitality’s properties are located in the Middle Atlantic, Southeastern and the Southwestern states. The stock of Prime Hospitality Corp. has risen 14% since our original recommendation in September 2003, which is somewhat better than the overall stock market.
We continue to recommend Prime Hospitality Corp. for the following reasons:
  • Prime Hospitality reported a first quarter loss of $.06 per share, which was significantly better then the comparable period in 2003, which showed a loss of $.15 per share. Normally, the first quarter is the weakest due to the seasonal slowdown in overall travel.
  • As we had anticipated, the improving economy is having a positive impact on the company. During the first quarter, total revenues rose to $110 million (up 15% from the $98 million in 2003). More importantly the company’s management has raised 2004 earnings guidance due to the improved operating environment.
  • From a financial viewpoint, Prime Hospitality has a strong balance sheet. Its debt to total capitalization is only 27%.
  • We view the stock of Prime Hospitality as a proxy for the improving economy. As the economy continues to register gains, room occupancy and room rates will show further increases, which the company has experienced over the past two months.
  • PDQ has a book value of $15.12
We maintain our target price of $13.00 per share.



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