InterContinental share price underperforms as Morgan Stanley lowers rating

on Jan 7, 2019
Updated: Mar 11, 2020

Shares in InterContinental Hotels Group (LON:IHG) have fallen into the red in London in today’s session, as Morgan Stanley lowered its rating on the Holiday Inn and Crowne Plaza owner. Proactive Investors reports that the analysts have flagged concerns over US business confidence.

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As of 13:52 GMT, InterContinental’s share price had given up 2.30 percent to 4,113.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.58 percent lower at 6,797.78 points. The group’s shares have lost more than 12 percent of their value over the past year, as compared with about a 12-percent dip in the Footsie.

Morgan Stanley trims rating on IHG

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Morgan Stanley lowered its rating on InterContinental to ‘underweight’ today. Proactive Investors reports that recent data has lead the broker to harbour concerns over the demand from corporate America, which accounts for around 70 percent of demand for hotels across the pond.

“We estimate that every one percent RevPAR (revenue per available room) growth is worth c.US$13 million of EBIT,” the analysts pointed out, adding that they were also trimming their “2019 RevPAR assumption from 1.3 percent to one percent, and 2020 from one percent to 0.6 percent, leading to a two-percent EPS (earnings per share) downgrade in 2020”.

The broker further reckons that the FTSE 100 group’s valuation is not as attractive as some of its peers, which have also seen their shares fall in recent months.

“While we like IHG’s business model, its risk-reward skew is less attractive than other stocks in our coverage such as Accor and Whitbread,” Morgan Stanley pointed out.

Other analysts on Holiday Inn owner

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Royal Bank of Canada initiated coverage of InterContinental with a ‘sector performer’ rating last month, valuing the shares at 4,500p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 4,663.64p.

As of 14:01 GMT, Monday, 07 January, InterContinental Hotels Group PLC share price is 4,113.00p.

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