Berenberg raises target price on IHG

28th Feb 2024 09:28

(Sharecast News) - Analysts at Berenberg raised their target price on Intercontinental Hotels Group from 6,000.0p to 7,400.0p on Wednesday following the group's "solid" full-year results.

Berenberg said IHG had delivered "a robust set of results" for FY23, which were broadly in line with expectations.

However, it noted that the shares had risen by 22% year-to-date, something it considers to be "disproportionate" to what the underlying results showed.

"While these results have led to both our and consensus estimates increasing, the shares have re-rated as we think the market is more confident in IHG's growth algorithm of consistent low double-digit EPS growth," said Berenberg.

The German bank, which reiterated its 'hold' rating on the stock, stated that at present, it thinks the multiple looks full and said that its numbers now sit in line with consensus estimates.

"We value IHG using a discounted cash flow, which yields a value per share of 7,400.0p. At present IHG trades on a price-to-earnings ratio of 26.6x our FY24 earnings per share estimate and while peers have also performed well, it has continued to close the valuation gap on its US-listed peer group, which further reaffirms our 'hold' rating."

Reporting by Iain Gilbert at Sharecast.com