Shares in InterContinental Hotels Group (LON:IHG) have climbed into positive territory in today’s session, outperforming the broader UK market, as the company flagged benefits from the new US tax bill. The comments came after the Congress approved an overhaul of the US tax code yesterday, with the reform set to deliver cuts in corporate tax rates.
As of 08:43 GMT, InterContinental’s share price had added 0.59 percent to 4,633.00p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing at 7,525.31 points, flat in percentage terms. The group’s shares have added just under 30 percent to their value over the past year, as compared with more than a six-percent advance in the Footsie.
InterContinental flags tax benefits
InterContinental said in a statement this morning that the new US Tax Cuts and Job Acts Bill passed yesterday was likely to reduce the company’s effective tax rate by mid to high single digit percentage points from January 1. In the current year, the group’s effective tax rate is still expected to be in the low 30s.
The Holiday Inn owner further expects the measures outlined in the new bill to result in a significant, exceptional tax credit in the financial year the bill is signed into law, which would be realised in cash terms over a long period from 2018. The group will provide any updates alongside its preliminary results on February 20.
Analysts on Holiday Inn owner
Barclays reaffirmed InterContinental as an ‘equal weight’ today, valuing the shares at 4,000p, while earlier this month, Credit Suisse reaffirmed its ‘outperform’ stance on the company, with a price target of 5,100p on the stock. According to MarketBeat, the company currently has a consensus ‘hold’ rating and an average valuation of 3,875.67p.
InterContinental updated investors on its third-quarter performance in October, posting a small rise in revenue as strong results in Europe and China helped offset a lacklustre performance in the Americas.