Broker tips: InterContinental Hotels, Bovis, TUI

11th Dec 2009 12:45

InterContinental Hotels has shrugged off a downgrade to 'hold' from 'buy' at Panmure Gordon, which thinks the shares are fully valued.The shares are trading very close to the broker's 910p price target following a strong performance in 2009, while Panmure adds that further consensus forecast upgrades are unlikely.It prefers Whitbread, with a 'buy' stance and 1,470p target. The Costa Coffee owner trades on a 30% discount to InterContinental, has potential catalysts in Q3 IMS on Monday and an investor day on 28 January, and generates all of its hotel profits from the UK, which appears likely to recover quicker than other developed markets.Bovis Homes bounced off a five-month low Friday as investors piled back into housebuilders and Killik Capital initiated coverage with a 'buy' rating.The long-term fundamentals of the UK housing market remain positive, and any concern over the outlook for house prices in 2010 is more than compensated for by the firm's current valuation, said the broker.Bovis shares trade on a discount of 28.7% to the last reported tangible net asset value (NAV), and Killik thinks NAV is likely to increase through retained earnings and if, as expected, writedowns are reversed with the final results in March."Following a period of cash conservation, Bovis has a strong balance sheet, leaving it better placed than many to take advantage of attractive land acquisitions," it says.German broker Commerzbank has kept its 'reduce' stance on TUI, the owner of 51.7% of package tour group TUI Travel.For the stub year 2009 (until the end of September), Commerzbank says it expects sales to have declined by 14% in comparison to the comparable period last year, mainly driven by strong volume declines at TUI Travel that were not offset by price increases. Mid-term financing concerns have eased since repayment of the TUI Travel shareholder loan was restructured, but 'we still see no financial leeway for reinvesting in tourism and resolving the current holding structure," the broker adds. Ongoing deterioration in the shipping business and the late cyclicality of tourism keeps weighting on the share price.