Broker snap: Jefferies lifts IHG target but keeps 'hold'

23rd Aug 2012 10:35

Jefferies has raised its target price for Holiday Inn and Crowne Plaza owner InterContinental Hotels from 1,350p to 1,500p, but has retained its 'hold' recommendation for the shares due to the lack of perceived potential upside to the stock.The shares are now trading close to an all-time high, the broker said, having jumped 75% from the lows of last summer. The stock is trading at 17.6 times next year's earnings, above its long-term average."Given the relatively rich valuation, we are struggling to see any further medium-term catalysts that could justify us being more positive on the shares," Jefferies said on Thursday.The target price increase comes as the broker rolls onto its 2013 forecasts for valuation purposes, it said.For 2013, Jefferies is expected RevPAR (revenue per available room) growth of 4% in the US and Greater China and 3% in Europe."The risks are that the US economy goes into reverse with a consequent negative effect on forecasts. Room growth may slow further and it may be unable to sell its trophy assets as planned. upside risks are that the recovery is longer and stronger than anticipated and it sells its assets sooner rather than later."By 12:34, shares were down 0.19% at 1,611p.BC