Benzinga | Sep 8, 2020 12:54PM EDT

Goldman Sachs Upgrades Wyndham, Hilton Grand, Says Timeshares Could See 'Pent-Up Demand'

A potential rapid recovery in consumer demand for vacation ownership could drive upside to the shares of Wyndham Destinations Inc (NYSE:WYND) and Hilton Grand Vacations Inc (NYSE:HGV), according to Goldman Sachs.

The Wyndham, Hilton Grand Analyst: Stephen Grambling upgraded Wyndham Destinations from Neutral to Buy and lifted the price target from $28 to $36.

The analyst upgraded Hilton Grand Vacations from Neutral to Buy and raised the price target from $22.50 to $29.

The Wyndham, Hilton Grand Takeaways: Both companies have high exposure to drive-to markets, which have already seen significant improvement, Grambling said in the Tuesday upgrade note.

Both companies have exhibited resilience in generating free cash flow after their transformation to standalone business models, the analyst said.

"While timeshares are not sold as substitutes for a second home, vacation ownership interest sales have been correlated to home prices and affordability."

Existing home sales accelerated 25% in July, and consumers are looking for vacation options with a full kitchen and living area, Grambling said.

"Timeshares could see similar pent-up demand as sales centers reopen and travel restarts in earnest."

WYND, HGV Price Action: Shares of Wyndham Destinations were up 4.77% at $32.97 at last check Tuesday.

Hilton Grand Vacations shares were trading 2.51% higher to $23.32.

Photo by Aeapart via Wikimedia.