Credit Suisse lifts InterContinental price target after HK hotel sale

10th Jul 2015 11:34

Credit Suisse raised its price target on InterContinental Hotels Group to 2,820p from 2,700p following the company's disposal of its five-star Hong Kong hotel for $938m.The bank updated its estimates to reflect the disposal and capture an assumed $1.5bn special dividend to be paid in the second quarter of 2016.CS lifted its full-year 2017 earnings per share estimate to $2.44 from $2.30.Given the disposal news, the bank removed the $500m buyback it had assumed would be announced at 30 July interims given IHG has stated the cash return will be determined at the February 2016 results. However, it said this is more than compensated by assuming a $1.5bn special dividend is then announced and paid in the second quarter of 2016, which CS models as consolidating the share count like a buyback.Following the initial share price move early Friday and with limited upside potential to its target price, it kept the stock at 'neutral'.At 11:34, IHG shares were up 3.1% at 2,686p.