Intercontinental Hotels Group PLC (LSE:IHG) has been hit with a ‘sell’ rating by Citi analysts over fears of downside risks to revenue expectations.
First quarter results from IHG last week showed a 2.6% increase in revenue per available room (RevPAR).
However, Citi analysts noted that largely unchanged demand meant estimates for a 3.4% growth in RevPAR may be too ambitious, with the figure appearing to lag over the first quarter.
Alongside this, Citi noted underlying growth, excluding deals adding to IHG’s portfolio, also appeared to lag behind full-year expectations.
Lower marketing costs and loyalty programme fees could help to drive earnings, the bank said.
“However, feedback from investors points to these benefits arguably having already been captured in buy-side multiples as a component of IHG's very strong business model,” Citi added.
Citi hit IHG with a ‘sell’ rating as a result, alongside a 6,300p share price target - down 20% on Wednesday’s close.