Story
InterContinental Hotels Stock Rises Over 3% on UBS Upgrade
Summary
Shares of InterContinental Hotels Group surged after UBS upgraded the stock to 'Buy' from 'Neutral,' citing an attractive valuation and raising its price target.
InterContinental Hotels Group PLC (IHG) shares rallied more than 3% on Tuesday, significantly outperforming a declining broader market after analysts at UBS upgraded the stock and pointed to an attractive entry point for investors.
Analyst Cites Valuation Opportunity
UBS lifted its rating on IHG to 'Buy' from 'Neutral' and raised its price target to $188 from a previous $157.65. In a note to clients, the bank argued that the stock's recent underperformance compared to its peers has created a compelling investment case.
Key points from the UBS analysis include:
- IHG now trades at an approximate 3% discount to competitor Hilton, a reversal from the historical parity between the two hotel giants.
- The stock's EV/EBITDA multiple relative to its own history has compressed significantly, a move UBS described as likely "overdone."
AdReflecting a more optimistic outlook, UBS also increased its 2026 and 2027 earnings-per-share estimates for IHG by approximately 4%. The bank now forecasts full-year revenue per available room (RevPAR) growth of 3.5% and net unit growth of 5.0%.
Strong Performance Amid Market Headwinds
The upgrade follows a strong first half for the hotel operator, which reported 13% growth in adjusted EPS and a 4.1% increase in global RevPAR. Adding to investor confidence, IHG is continuing its share buyback program, having recently repurchased 86,715 shares for cancellation, according to a company disclosure.
IHG's gains stood in sharp contrast to the wider UK market, with the FTSE 100 index trading down roughly 0.3%. Broader market sentiment was pressured by rising geopolitical tensions and fears of persistent inflation, which pushed UK 10-year government bond yields to an 18-year high.
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