Broker tips: IHG, SABMiller, WH Smith

23rd Aug 2012 12:36

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.Nomura has downgraded its rating for drinks giant SABMiller from 'neutral' to 'reduce' with the shares now trading at a nine per cent premium to the 'beer average'."The H1 reporting from Heineken yesterday supports our cautious view, with higher input costs, exacerbated by FX movements, especially in C& E Europe and Africa. In addition, price/mix appears to have been weak in C & E Europe, exacerbated by growth in discount channels," the broker said.Investec has put its target price under review for newsagents chain WH Smith following the group's pre-closing trading update on Thursday, saying that the shares merit a higher rating.The broker has reiterated its 'buy' rating on the stock, saying its investment case is based on "the combination of profit growth, cash generation (= good yield and further buy-backs) and the growth opportunities in Travel."BC