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Hilton Group Sees Best Performance in Retreating FTSE 100

Strategic Insights

— 1 min read

Hilton Group's robust performance is attributed to a positive response from investors during a recent roadshow and the company's disposal program. The hotel and gaming operator's chief executive, David Michels, and finance director, Brian Wallace, have been engaging with City investors, and their presentations appear to have been well received. Deutsche Bank and ABN Amro have expressed bullish sentiments, with the latter raising its target from 350p to 375p, citing the potential for further asset sales beyond the current £400 million on the market.

Key Takeaways:

  • Hilton Group's disposal program appears to be on track, according to Deutsche Bank, which stated that the shares look undervalued.
  • ABN Amro increased its target from 350p to 375p, advising clients to buy on recent share price weakness.
  • Simon Larkin, analyst, detected a change in language at Hilton's first-half results, suggesting that the company may pursue further asset sales, leading to a rump hotel business.
  • The potential for further asset sales could prompt big cash returns to shareholders and higher quality earnings from the remaining businesses.
  • The rump hotel business may be vulnerable to future industry consolidation, with Hilton Hotels Corporation being a potential acquirer.
  • PartyGaming retreated 8p to 87p due to a weak debut by its smaller rival, 888 Holdings.
  • The FTSE 100 ended 16.6 off at 5,478.2, with better-than-forecast US jobs data and a resilient energy sector mitigating losses.

Statistics:

  • Hilton Group's share price rose 7p to 315p.
  • The FTSE 100 index ended 16.6 points lower at 5,478.2.
  • PartyGaming's share price declined 8p to 87p.
  • BP added 4p to 683p, with Shell up 10p at £19.56, as crude prices held above $66 a barrel.
  • Northern Rock's share price increased 8p to 828p, with Deutsche Bank advising clients to buy ahead of its trading statement.
  • Royal Bank of Scotland's share price dipped 19p to £16.10, with its new chairman, Sir Tom McKillop, buying 30,000 shares at £16.12.

Sources:

  • Deutsche Bank
  • ABN Amro
  • The Times, 2005
  • Reuters, 2005
  • Bloomberg, 2005

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