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Risk Warning
09/08/2011
Hotel chain operator InterContinental Hotels Group (IHG) has been oversold, according to Prime Markets, which has reiterated its buy recommendation on the stock.
"[IHG] is currently a victim of the global stocks sell-off, but in our view this should not detract from a solid 6 months of results nor the currently favourable trading environment," said the broker's head of dealing, Richard Curr.
The firm - which owns the Crowne Plaza and Holiday Inn hotels - revealed on Tuesday that operating profits jumped 23% on sales that were 10% higher, both of which were ahead of the broker's expectations.
"RevPAR (Revenue Per Room Available) performance is particularly impressive and looking set to continue given Intercontinental's broad exposure, diversified market-leading brands and low supply growth in many markets as highlighted by [chief executive offier] Richard Solomons," Curr added.
Prime Markets believes that with the shares hitting a year low (from July 2010) at 962p - and the relative strength index falling below 20 - the stock has been oversold and should return to the November 2010 low of 1,085p in the next six to eight weeks.
By 12.31pm, shares were trading 4.67% at 1,008p.
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.