Berenberg keeps On the Beach at 'buy', slashes target price
On The Beach Group
150.00p
16:35 24/04/24
Analysts at Berenberg reiterated their 'buy' rating on shares of package holiday group On the Beach on Tuesday but slashed their target price following the firm's recent profit warning.
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On the Beach issued a profit warning on 9 August, due to the weak UK consumer environment on the back of Brexit uncertainties and the continued fall in the pound.
However, while Berenberg said such announcements were "always a surprise", the analysts said they had "plenty of sympathy considering the market backdrop" and highlighted the fact that they still expected On the Beach to grow profits in 2019, demonstrating "the resilience" of its business model.
Given the "myriad of headwinds", the German bank said it was worth noting that it still anticipates OTB's core UK earnings to be "at least flat" in 2019 and pointed out how its peers had been "pushed to the brink and beyond", something it thought "testifies to the virtues" of the group's model.
"While we acknowledge that any further deterioration in the UK political landscape could pose additional downside risk, we believe the shares remain good value, particularly on a multi-year view," said Berenberg, which dropped its target price on the group's shares from 630p to 480p.