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25 Nov, 2021 12:28 25 Nov, 2021 12:28

Jefferies says 'buy' IHG in bullish hotels note

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InterContinental Hotels GroupCompany photo / IHG

Jefferies urged investors to 'buy' InterContinental Hotels as the broker chose hotels as its top subsector in the leisure industry.

After a lacklustre 2021, European hotel shares are likely to perform well in 2022, Jefferies said. It based its recommendation on a recovery in US hotel footfall and higher internet searches and web traffic.

Operators with US exposure will outperform and the market may consolidate in 2022 as well, the broker said. Jefferies upgraded IHG two notches from 'underperform' based on the company having 60% of its rooms in the Americas and increased its price target for IHG shares to £57.50 from £37.50.

Jefferies kept its 'buy' rating on Whitbread but cut its price target to £36 from £40. The broker upgraded Spanish hotelier Melia to 'buy' from 'hold and nudged up its target price to €7.50 from €7.40. Scandic shares were upgraded to 'hold' from 'underperform' and the Swedish group's price target was increased to SEK35 from SEK27.80.

In a note to clients, Jefferies analyst James Wheatcroft said: "We expect operators with US, domestic and/or leisure exposure to continue to outperform in 2022. We push market consolidation expectations into 2022 too. Asset owners may attract more investor interest in an inflationary backdrop. For better positioned operators, we expect debate around shareholder returns to reemerge."

The broker left On The Beach as an 'underperform'-rated stock and cut its price target to 220p from 300p.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.