UBS raises Accor SA stock to Buy in light of strong market position

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UBS raises Accor SA stock to Buy in light of strong market position
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On Tuesday, UBS analyst Jarrod Castle upgraded the rating for Accor SA (OTC: ACCYY ), a French multinational hospitality company, from Neutral to Buy. The firm also raised the price target on the company's stock to EUR50.00, up from the previous EUR40.35. The revision reflects a positive outlook on the company's revenue per available room (revpar) trends and the broader travel industry's demand stability.

The upgrade comes as UBS notes a consensus among various travel sector companies, including hoteliers, package holiday companies, airlines, and cruise liners, that consumer demand remains robust. Additionally, UBS anticipates the potential for Accor (EPA: ACCP )'s hotel pipeline to accelerate with the likelihood of falling interest rates.

The analyst's confidence in the company's management to adhere to its strategic plan for the years 2023 to 2027 also played a crucial role in the rating change.

UBS has increased its forecasts and valuation multiple for Accor, citing the company's potential for further multiple re-rating. This potential is contingent upon the management's continued execution of its strategy, which could help Accor narrow the valuation gap with its industry peers. For context, Accor's competitor, InterContinental Hotels Group (LON: IHG ), currently holds a premium valuation approximately 37% higher than Accor, compared to a historical premium of 41%.

The new price target represents UBS's expectation for Accor's share value, implying a significant increase from the prior target. This adjustment is based on the firm's analysis of Accor's business performance and market position. The analyst's remarks underscore the belief that Accor's adherence to its strategic plan will be a pivotal factor in the company's ability to enhance shareholder value.

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