Broker snap: InterContinental Hotels Group a 'hold', says Panmure

28th Oct 2013 10:29

InterContinental Hotels Group's shares slumped after Panmure Gordon reiterated a 'hold' rating as the company reported a weaker-than-expected third quarter trading update. Revenue per available room (RevPAR) for its US and Americas brands in the nine months ended September 30th grew 4.5%, driven predominantly by a 2.9% increase in rates.The company's third quarter trading was a bit below expectations, analysts at Panmure Gordon pointed out, with a weak showing for the Americas in September (RevPar up 3.7% and the US at 1.6%)."The culprit was Holiday Inn which was down 0.9% reflecting slower group business. Current trading trends give the group confidence for the rest of the year but we think RevPar expectations may edge back a bit for Q4 in both Americas and Greater China," the broker said."Strengthening sterling works against static valuation metrics with majority of earnings in dollars and share price in £. The company trades on a estimated 2014 price-to-earnings multiple of 18.9 times, adjusted enterprise value/earnings before interest, taxes, depreciation, amortisation and rent [EV/EBITDAR] of 11.3 times and yields 2.6%. We reiterate our hold recommendation."Consensus forecasts are for $660m earnings before interest and tax and Panmure expects these will edge back.RD