InterContinental Hotels rallies on Barclays upgrade

3rd Jan 2017 08:00

(ShareCast News) - Barclays upgraded InterContinental Hotels Group to 'overweight' from 'equalweight' and upped the price target to 4,000p from 3,060p, saying the full-year results in February should be a positive catalyst."We also consider IHG to be the best play in the sector on a potential rebound in US growth (key lead indicator looks encouraging) as well as potential tax cuts," the bank said.It said IHG is now its preferred pick in the hotel sector, followed by Accor, with Whitbread its least preferred.As far as the FY results are concerned, it expects the company to announce a cash return of around $350m."While we have had numerous cash return announcements in previous years, we would view this one as particularly significant since it would be unrelated to one-off asset sales and instead reflect the underlying cash generative business model."Barclays upped its earnings per share forecasts for 2017 to $2.34 from $2.28 and for 2018 to $2.60 from $2.44.The bank now assumes fourth quarter revenue per available room growth of 1.9% versus 1.3% in the third quarter.At 0900 GMT, the shares were up 3.8% to 3,778p.