Zacks Analyst Interview Highlights: Starwood Hotels, Royal Caribbean and Carnival

Business Wire, August 24, 2007

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Sean P. Smith, who discusses Starwood Hotels (NYSE: HOT), Royal Caribbean (NYSE: RCL) and Carnival (NYSE: CCL).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

What Buy recommendations in the travel & leisure sector do you have for us?

On the hotel side, we currently have a Buy rating on Starwood Hotels (NYSE: HOT). The shares have pulled back roughly 20% from the highs reached in August. Starwood had been considered by many on the Street to be a potential takeover candidate, and given the recent developments in the credit markets, much of that takeover premium has been removed from the share price. We think that the selling has been overdone, however, and consider the current price to be attractive.

As for the cruise lines, we have a Buy rating on shares of Royal Caribbean (NYSE: RCL), primarily due to valuation. The shares continue to trade at a discount to Carnival (NYSE: CCL). While the impact of fuel prices and the potential for slowing consumer spending are concerns, we still believe that shares are undervalued near current levels.

Has anything changed in your outlook for fiscal 2007, or looking ahead to 2008?

We continue to believe that lodging industry fundamentals are holding up well. While we do not expect to see the continuation of rapid growth in operating results like we have over the last couple years, we anticipate that the group should post steady, moderate growth going forward. Given that scenario, we expect that the sector will hold up well relative to the rest of the market. It may very well become more of a stock-picking market in this sector, but we expect that some good investment opportunities will still be available.

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