InterContinental Hotels might offer investors a “positive surprise” when it reports tomorrow (Tuesday, 21 February), says broker Jefferies, based on its projected 2023 net unit growth and potential buybacks.
Analysts at the US bank expect the Holiday Inn owner to broadly meet 2022 consensus estimates, with US$500mln earmarked for buybacks in the coming year alongside net unit growth of over 4%.
Jefferies raised its target price of 6,200p, up from 5,618p as it believes the economic challenges are now “well understood” and there was scope for upgrades.
InterContinental’s outlook rests on macro-economic challenges, Jefferies said, given fears of further Covid-19 lockdowns in China and a difficult “construction environment” in the US.
“We expect conservatism in company messaging given macro uncertainty,” the investment bank added, but there is “scope for re-rating” based on the recovery of the hospitality sector.
InterContinental reported an operating profit of US$534mln in 2021, while revenue reached US$2.9bn.
In the third quarter revenue per available room was up 28%, while demand was boosted by a strong summer period, the group said in an October trading update.