The Zacks Analyst Blog Highlights: Starwood Hotels & Resorts Worldwide, Choice Hotel International, Wyndham Worldwide, Intercontinental Hotels Group and Merge Healthcare Incorporated

Feb 27, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Feb. 27, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT), Choice Hotel International Inc. (NYSE: CHH), Wyndham Worldwide Corp. (NYSE: WYN), Intercontinental Hotels Group plc (NYSE: IHG) and Merge Healthcare Incorporated (Nasdaq: MRGE).


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Here are highlights from Tuesday's Analyst Blog:

Starwood Upgraded to Outperform

On Feb 22, we upgraded our recommendation on Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) to Outperform based on better-than-expected fourth-quarter 2012 results.

Why the Upgrade?

Starwood's fourth-quarter 2012 earnings and revenues comprehensively surpassed the Zacks Consensus Estimate. Revenue per available room (RevPAR) in all regions registered a modest rise in the quarter. Improving trends in the North American business, significant international exposure and portfolio restructuring should also augur well for Starwood.

Owing to a gradual economic recovery, system-wide occupancies at Starwood hotels in North America appear to be pretty steady and above the prior peak level in 2006. Starwood opened 23 hotels in North America in 2012 and signed several new deals, much more than it had done in the past couple of years. Starwood expects 2013 to be its strongest year in terms of hotel openings in North America since the recession.

The hotelier is also poised to tap the reviving economic condition in the emerging markets. More than half of the hotel's properties are situated outside the U.S., which gives the company wide international exposure, unlike many of its peers. Markets within Asia-Pacific and Latin America promise immense growth potential with visits expected to increase substantially going forward.

Asset disposition remains another bright spot for the company. This strategy paves the way for the company to attain higher financial flexibility. In a cutthroat competitive environment, Starwood is also deploying its capital to renovate its assets as lucrative leisure destinations.

Management also expects accelerated growth in the Chinese market post Government transition and fewer concerns in Europe in 2013 to aid the company's earnings. Moreover, share repurchase activity and dividend distribution are the other positives.

Other Stocks to Consider

Other players in the hotels sector that are currently performing well include Choice Hotel International Inc. (NYSE: CHH), Wyndham Worldwide Corp. (NYSE: WYN) and Intercontinental Hotels Group plc (NYSE: IHG). All these companies carry a Zacks Rank #2 (Buy).


Yet Another Client Win for Merge


Imaging and interoperability solutions provider Merge Healthcare Incorporated (Nasdaq: MRGE) continues to extend its customer base. The company recently disclosed that its complete iConnect Enterprise Clinical Platform and Merge Honeycomb Archive will be deployed at Graham Hospital in Canton, Illinois.

While iConnect is an interoperability and connectivity platform, Honeycomb is a cloud-based platform which shares, manages and stores diagnostic images. iConnect offers hospitals and imaging centers the ability to create information exchanges within their environments and with other entities. It also provides access to imaging and diagnostic data across disparate sites, geographies, specialties and providers.

The deployment will enable Graham Hospital to improve standards of care. Further, it will improve the workflow of the hospital's IT resources and decrease costs. The implementation of Merge Healthcare's offerings will also support the hospital's effort to meet the Stage 2 criteria of the Meaningful Use incentive program including image-enabling the Electronic Health Record (EHR). Implementation of the final stage 2 ruling will begin in 2014.

Our Take

Merge Healthcare is in the midst of a challenging reimbursement environment. Additionally, the macroeconomic woes negatively impacted the market for medical imaging technologies. Notably, general slowdown in hospital spending and low demand for imaging equipment and related technology, a result of the global credit crisis and macroeconomic factors, could result in lower Merge Healthcare product sales.

However, we should not overlook the company's growth in bookings and recent contract wins. It is commendable that Merge Healthcare continues to ink contracts despite several headwinds. The company is also well placed to benefit from the strong demand for EHR-related software in the foreseeable future on the back of the stimulus bill.


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