MainFirst has initiated coverage of Intercontinental Hotels PLC (LON:IHG) with an 'outperform' rating, arguing that the FTSE 100-listed firm looks to be a safe haven with opportunities for growth acceleration.
The European broker set a 5,600p price target on the Holiday Inn owner, with the stock trading at 4,920p in afternoon trading, up 1.7% on Monday’s close.
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In a note to clients, MainFirst’s analysts pointed out that IHG shares are up 14% year-to-date but trading at an "attractive" 18x price-to-earnings based on full-year 2020 estimates, versus French rival Accor at 19.5%, while offering a 10% three-year earnings per share compound annual growth rate.
They added: “This, coupled with its best-in class attributes, are key components vis-à-vis industry threats, ultimately offering a less risky play within our coverage.”
The analysts concluded: "IHG offers a pure asset-light model with a proven earnings and cash resilience through the cycle. Its best-in-class features, including its portfolio of strong brands, and a leading commercial/technological platform, bring competitive advantages and constitute solid attributes to face industry-specific threats.
"Strategic initiatives recently unveiled pave the way for a progressive acceleration in the development of the portfolio."
The MainFirst analysts noted that the next catalyst for the shares will be IHG's first-quarter trading update on 3 May, which it expects to show a steady quarter-on-quarter revenue per available room trend and positive net system size growth momentum.