Broker snap: US drives upgrades for InterContinental, says Credit Suisse

10th Feb 2012 11:30

Credit Suisse has jacked up its target price for Holiday Inn and Crowne Plaza owner InterContinental Hotels (IHG) by almost a third saying that resilience in the US has driven a 12% upgrade to earnings per share (EPS) forecasts."The strong recent run in IHG shares (up 36% since late Nov) precludes us from upgrading our [neutral] rating ahead of FY results but signs of robust US trading support 12% EPS upgrades as we move to an assumed 4% RevPAR [revenue per available room] growth for 2012," analysts said. Previously, the broker had assumed 0% RevPAR growth.Credit Suisse says the improved US outlook is due to a confident US proprietary corporate spend survey, solid corporate forward bookings and a year-to-date run-rate of 8% US RevPAR growth.The broker thinks that the disposal of the InterContinental Barclay hotel in New York looks increasingly likely, following a number of recent Manhattan transitions. This "potentially adds $300-350m to IHG's firepower."The target price is lifted from 1,182p to 1,514p.BC