IHG Shares Gain as Bearish Analyst Shifts to Neutral

InterContinental Hotels Group shares (LON:IHG) saw a modest boost this morning following an upgrade from Morgan Stanley, although the firm suggests the stock is now fairly valued. The shift in rating reflects a recognition of IHG's resilient business model amid fluctuating economic conditions.

The markets reacted positively to the revised outlook, with IHG shares adding 0.71% on the day. This movement indicates a degree of renewed confidence, though tempered by the assessment that the shares are trading at a price commensurate with their intrinsic value.

Morgan Stanley analyst Jamie Rollo adjusted IHG's rating from ‘Underweight' to ‘Equal Weight,' simultaneously increasing the price target to 9,000 GBp from a previous 8,800 GBp. Rollo's analysis points to IHG's superior operational efficiencies when compared to competitors like Accor. These efficiencies have played a crucial role in mitigating the impact of weaker Revenue per Available Room (RevPAR) figures.

IHG's recent financial performance presents a mixed picture. The second quarter of 2025 saw a 0.9% decline in U.S. RevPAR, attributed to broader economic uncertainties, including trade tariffs and geopolitical tensions dampening consumer confidence. However, this downturn followed a stronger first quarter, where U.S. room revenue increased by 3.5%, outperforming rivals such as Marriott and Hilton due to robust domestic demand.

Despite the challenges in the U.S. market, IHG has demonstrated a commitment to returning value to shareholders. This commitment was underscored by a significant increase in the semi-annual dividend, raised to $1.144 per share from the previous $0.53.

An upgrade that remains below the current price target is not exactly bullish, yet moving a previous bear into neutral territory is certainly not a bad start!