Peel Hunt starts Whitbread at 'buy'
Peel Hunt initiated coverage on shares of Premier Inn owner Whitbread at 'buy' with a 4,800p price target on Monday.
FTSE 100
8,139.83
17:09 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
Travel & Leisure
7,572.38
16:59 26/04/24
Whitbread
3,043.00p
16:40 26/04/24
It said the current share price is missing the value locked up in the growth strategy and the freehold assets.
The broker said room capacity at Premier Inn will increase 22% based on the committed pipeline and could more than double. Meanwhile, the stock's valuation is underpinned by £5bn of freeholds.
"Management will steadily recycle/return capital as appropriate," it said, adding that a bidder could plan to release capital more quickly.
Peel Hunt forecasts 69% earnings per share growth in FY20-24, driven by 23% capacity growth to 101,000 rooms from 77,000 currently.
"With the hotel cycle turning there is a risk that negative forecast momentum caps the short-term share price upside," it said.
At 1300 GMT, the shares were up 1.1% at 4,171p.