Hotels giant reports better than expected profits but shares fall after recent rally
Investors have decided to check out of *InterContinental Hotels* after recent rises in the group's share price.
The owner of the Crowne Plaza, Holiday Inns and InterContinental brands reported an 11% jump in full year profits to $614m, helped by a good performance in the US and growth in emerging markets. It plans to sell its New York Barclay and London Park Lane hotels, with the $700m proceeds expected to be given back to shareholders.
But with its shares hitting a twelve month high during Monday's trading, profit taking has pushed them 46p lower to £19.43. Analyst James Hollins at Investec moved his recommendation from buy to hold:
InterContinental has reported a 2% 2012 full year earnings beat and, in our view, the stock [offers] high returns, global growth/diversity, leading brands and projected ongoing cash shareholder returns.
We think parity with its US peers is fair and that InterContinental remains a core sector holding, particularly given our unchanged view that a further $1bn of cash shareholder returns is likely in the next 12 months (depending on the sale of the London and New York InterContinental hotels – this remains an ongoing process). However, the rating and recent share run drive our move from buy to hold, albeit on a higher price target of £20.
Simon French at Panmure Gordon also has a hold rating, but with a £17.24 target:
We are not particularly optimistic about the global macro-economic backdrop but demand remains relatively robust in the Americas and crucially supply growth is virtually non-existent enabling hoteliers to push through increases in average daily rate. Supply growth is stronger in Europe, particularly in the UK (and especially London).
InterContinental would have been the top faller in the leading index, if not for *Vodafone*. The mobile phone group, which is reportedly considering a bid for Kabel Deutschland, is down 5.05p to 161.75p after analysts at Berstein moved from market perform to underperform. In Europe the broker said Vodafone could chose between managing structural decline, or buying its way out of the problem, both of which would be expensive. It said:
If Vodafone chooses not to buy wireless assets we think it will not sell Verizon Wireless [its US joint venture with Verizon], which contributes a healthy dividend. If Vodafone does buy some wireless assets it risks becoming a forced seller of Verizon Wireless or if they don't sell, investors will rightly discount Verizon Wireless within Vodafone as they wait for Vodafone to eventually finish their wireline footprint at a much higher price.
Despite these falls, the *FTSE 100* has gained 10.13 points to 6328.32, led by *Standard Chartered*. The bank has added 44p to 1773.5p after a positive note from Morgan Stanley, which raised its rating from equal weight to overweight. It said:
Standard is now our preferred name among the UK-Asian banks, versus. *HSBC*, as relative valuation has reached parity. HSBC looks fairly valued on lower revenue growth expectations, while an improving Asian macro should reduce asset quality concerns for Standard, driving a performance reversal.
HSBC has dipped 3.2p to 722.8p. Reported by guardian.co.uk 6 hours ago.
Investors have decided to check out of *InterContinental Hotels* after recent rises in the group's share price.
The owner of the Crowne Plaza, Holiday Inns and InterContinental brands reported an 11% jump in full year profits to $614m, helped by a good performance in the US and growth in emerging markets. It plans to sell its New York Barclay and London Park Lane hotels, with the $700m proceeds expected to be given back to shareholders.
But with its shares hitting a twelve month high during Monday's trading, profit taking has pushed them 46p lower to £19.43. Analyst James Hollins at Investec moved his recommendation from buy to hold:
InterContinental has reported a 2% 2012 full year earnings beat and, in our view, the stock [offers] high returns, global growth/diversity, leading brands and projected ongoing cash shareholder returns.
We think parity with its US peers is fair and that InterContinental remains a core sector holding, particularly given our unchanged view that a further $1bn of cash shareholder returns is likely in the next 12 months (depending on the sale of the London and New York InterContinental hotels – this remains an ongoing process). However, the rating and recent share run drive our move from buy to hold, albeit on a higher price target of £20.
Simon French at Panmure Gordon also has a hold rating, but with a £17.24 target:
We are not particularly optimistic about the global macro-economic backdrop but demand remains relatively robust in the Americas and crucially supply growth is virtually non-existent enabling hoteliers to push through increases in average daily rate. Supply growth is stronger in Europe, particularly in the UK (and especially London).
InterContinental would have been the top faller in the leading index, if not for *Vodafone*. The mobile phone group, which is reportedly considering a bid for Kabel Deutschland, is down 5.05p to 161.75p after analysts at Berstein moved from market perform to underperform. In Europe the broker said Vodafone could chose between managing structural decline, or buying its way out of the problem, both of which would be expensive. It said:
If Vodafone chooses not to buy wireless assets we think it will not sell Verizon Wireless [its US joint venture with Verizon], which contributes a healthy dividend. If Vodafone does buy some wireless assets it risks becoming a forced seller of Verizon Wireless or if they don't sell, investors will rightly discount Verizon Wireless within Vodafone as they wait for Vodafone to eventually finish their wireline footprint at a much higher price.
Despite these falls, the *FTSE 100* has gained 10.13 points to 6328.32, led by *Standard Chartered*. The bank has added 44p to 1773.5p after a positive note from Morgan Stanley, which raised its rating from equal weight to overweight. It said:
Standard is now our preferred name among the UK-Asian banks, versus. *HSBC*, as relative valuation has reached parity. HSBC looks fairly valued on lower revenue growth expectations, while an improving Asian macro should reduce asset quality concerns for Standard, driving a performance reversal.
HSBC has dipped 3.2p to 722.8p. Reported by guardian.co.uk 6 hours ago.