Raymond James downgrades RLJ Lodging Trust stock rating on valuation

Raymond James has reduced its rating on RLJ Lodging Trust (NYSE:RLJ) stock to Market Perform from Outperform due to valuation concerns. The firm pointed out that the stock has surged 50% year-to-date, trading at approximately 20% below its estimated net asset value and 11 times 2027 enterprise value to EBITDA. Despite this strong year-to-date performance, including a 55% return and 62% gain over the past year, Raymond James perceives superior risk/reward opportunities in the lodging REIT sector, favoring other REITs with larger valuation discounts or higher projected 2027 EBITDA growth.

The stock is currently valued at about 11 times 2026 estimated enterprise value to EBITDA and 20% below the firm's net asset value estimate. While Raymond James still anticipates upside for RLJ Lodging Trust, it believes other lodging REITs offer greater upside potential. RLJ Lodging Trust recently reported surpassing earnings expectations for Q2 2026, with adjusted earnings per share of $0.16, revenue of $382.99 million, and a 6.8% increase in comparable RevPAR.

Management raised its full-year guidance for RevPAR, hotel EBITDA, and adjusted FFO, highlighting a strong balance sheet with approximately $1 billion in liquidity and no debt maturities until 2029. The company's 91-hotel comparable portfolio performed well, outpacing the lodging industry by 110 basis points in RevPAR growth.