Ladenburg analyst Floris van Dijkum initiated coverage of Service Properties with a Buy rating and $2.25 price target. The firm says that despite the company's higher leverage, its mixed net lease and hotel portfolio creates potential upside. Service shares trade at a 53% discount to net asset value and at a significant discount to its hotel and net lease peers, the analyst tells investors in a research note. Ladenburg believes Service Properties' valuation provides "a margin of safety," with potential catalysts from non-core hotel sales, continued hotel operational improvements, and the realization of additional strategic value from the Sonesta relationship over time.
