LONDON (SHARECAST) - Nomura has reiterated its 'buy' rating and 2,220p target price for Whitbread, saying that its second-quarter trading statement shows 'solid trading' at Premier Inn and a 'strong performance' in pubs/restaurants and Costa.
In hotels, second-quarter RevPAR (revenue per available room) growth was 1.9%, below the 3% rate in the first quarter. This was also under Nomura's 3% estimate, but the broker said that it reflects volatile trading conditions in June through to August.
Nomura said: "From a market perspective, the Olympics had a negative displacement effect in June and July that were in part offset by a very strong August. In this context the consistency of RevPAR across Q1 and Q2 is reassuring."
Meanwhile, pub/restaurant like-for-like (LFL) sales were up 4.9%, better than the 2.1% growth in the first quarter and "well ahead of peers", according to Nomura. Costa LFL growth slowed from 8.4% to 5.7% quarter-on-quarter, but the broker notes that the division had a "particularly strong prior-year comp".
The broker expects 2013 RevPAR growth of 2% and 4,200 room openings, while LFL sales in pub/restaurants and Costa are forecast to grow by 0.3% and 2%, respectively.
While Nomura says that it would not expect to change its RevPAR assumption, the run-rate in Costa and pub/restaurants implies a "degree of upside" to forecasts if maintained in the second half.
"We believe it offers compelling value for a stock with impressive roll-out potential, strong asset backing and impressive trading momentum."
In direct contrast, Investec this morning maintained its 'sell' rating and 1,500p target price on the stock, saying: "Costa has an exceptional growth platform, notably in Asia, but we retain our medium-term concerns over UK hotels/restaurants returns, with no discernible upside from international hotels growth".
The statement was well received by the markets on Thursday, with shares up 6.86% at 2,243p by 09:42.
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