Hotelier InterContinental Hotels (IHG) falls 2.1 percent following the publication of its full year results as investors bank profit on the company's shares, which hit an all-time in the previous session.
IHG, the world's biggest hotelier, posted an 11 percent rise in 2012 profit, underpinned by a strong U.S. business and expansion in developing markets, but Investec (LSE: INVP.L - news) cut its rating on the firm to "hold" from "buy" following a 30 percent rally in its shares over the last three-months.
The rally has propelled IHG's 12-month forward price-to-earnings rating to around 19.5 times, compared with U.S. peer Marriott on 20.3 times, and the FTSE 100 (FTSE: ^FTSE - news) on 11.6 times, and 40 percent above its historical average according to Thomson Reuters (Munich: 864655 - news) data.
"The rating and recent share run drive our (downgrade)," Investec says in a note.
"We think parity with its U.S. peers is fair and that IHG remains a core sector holding, particularly given our unchanged view that a further circa $1 billion of cash shareholder returns is likely in the next 12 months (depending on the sale of the London and New York InterContinental hotels)," the bank says.
Traded volume was heavy in early deals, at 30 percent of the stock's 90-day daily average, three times that for the broader index and making it the third most traded stock on the FTSE 100 by 0902 GMT.
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