JP Morgan backs Whitbread, downgrades InterContinental

The bank said it had cut Holiday Inn-operator IHG to ‘’underweight’ from ‘neutral’, while Whitbread – the owner of Premier Inn – has been upgraded to ‘overweight’ from ‘neutral’. Both companies have the same price target of 4,000.0p.

Estelle Weingrod, analyst, said: “We believe that Whitbread should continue to perform better than peers, being the more likely candidate to gain market share post pandemic – hence underpinning a premium to historical multiples, unlike peers – while being the least concerned about potential structural headwinds faced by the industry.

“On the other hand, we think IHG shares have gone too far, at the upper end of where European hotels have traded historically, and see the risk-reward skewed to the downside: less appealing equity story in the context of recovery, growth prospects more appealing at US peers.”

Revenue assumptions for the 2022 full-year have remained broadly unchanged across the board, although margin assumptions have been “tweaked”: downwards at IHG and upwards at Whitbread. Both are below pre-Covid-19 levels.

The bank has kept its rating on France’s Accor at ‘neutral’.

As at 1145 GMT, shares in Whitbread were down nearly 1% at 3,575.0p, and nearly 3% at IHG, at 5,002.0p.