Will Investors Be Willing To Stay With InterContinental Hotels After FY Results?
Spreadex | Feb 18, 2019 10:02
After a rocky 2018, one which saw the stock’s spring/summer gains undone by an awful October, the global hotel firm has been following the FTSE higher in 2019. Starting at £41.86, InterContinental Hotels Group PLC (LON:IHG) now sits at a current trading price of £46.14, just shy of the previous week’s £46.68, 4-month peak.
Part of that aforementioned October slide was a poorly received set of third quarter results. A huge $500 million share buyback, to be initiated in early 2019, wasn’t enough to get investors on board, the markets instead focusing on the company’s growth problem.
Like-for-like Q3 revenue per available room was up just 1%, that slowdown largely due to the flat performance in the US, which suffered due to tough comparatives relating to ‘hurricane-related demand’ for the same period the year previous. Elsewhere the Middle East and Australia suffered ‘low single digit’ declines.
There were pockets of positivity, however. For the year-to-date RevPar rose 2.7%, while in the third quarter specifically Greater China saw a robust 4.8% increase, with double-digit growth in Russia thanks to the influence of the World Cup.
In terms of Tuesday’s results, the fourth quarter performance of those lacklustre regions – namely the US, Middle East and Australia – are going to be under scrutiny. Given it is firmly ‘early 2019’, further word on the special dividend is expected, while investors will be after more details on the recently announced $300 million acquisition of luxury hotel brand Six Senses.
InterContinental Hotels Group PLC(LON:IHG) has a consensus rating of ‘Hold’ alongside an average target price of £46.48.
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