InterContinental share price: Analysts weigh in on update

Written by: Tsveta van Son
March 11, 2020

AJ Bell reckons that it is no surprise to see that InterContinental Hotels Group’s (LON:IHG) share price has descended a little on the back of the group’s half-year results, Citywire reports. The comments came after the Holiday Inn and Crowne Plaza owner updated investors on its interim performance yesterday, posting flat growth in the US and lower revenue in Hong Kong, pointing to “the ongoing political disputes” in the country.

InterContinental’s share price fell in the previous session, giving up 2.04 percent to close at 5,181.00p, and underperforming the broader UK market, with the benchmark FTSE 100 index shedding 52.16 points to end trading 0.72 percent lower at 7,171.69. This morning, the shares have recouped some of yesterday’s losses, having climbed 1.14 percent to 5,240.00p as of 08:19 BST, as compared with about a 0.15-percent fall in the Footsie.

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AJ Bell weighs in on InterContinental

Citywire quoted AJ Bell analyst Russ Mould as commenting yesterday that InterContinental’s shares had ‘risen like a high-speed elevator’ this year so it was ‘no surprise to see… [them] descend a little’ on first-half results.

“The company has won a lot of fans thanks to its business model. Instead of owning its hotels, it operates on a franchise basis, which means it does not have to invest huge amounts of capital to expand,” the analyst pointed out, adding, however, that with demand for its rooms was “still linked to the performance of a global economy over which there is mounting concern”.

Other analysts on Holiday Inn owner

George Salmon at Hargreaves Lansdown meanwhile commented in a note yesterday that the broker reckons that exposure to US and Chinese markets should be beneficial in the long-run.

“We think the IHG business model is attractive, but a fairly high valuation of 19.7 times expected earnings, means we aren’t alone,” the analyst pointed out.

UBS meanwhile reaffirmed the company as a ‘sell,’ with a target on the InterContinental share price of 4,700p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 5,006.25p.