HSBC has trimmed its rating on Whitbread (LON:WTB) following this week’s rally. The Costa Coffee and Premier Inn owner has seen it shares rise after it emerged that a unit of US activist hedge fund Elliott Management had built up a near six-percent stake in the Premier Inn and Costa Coffee owner, with the news fuelling break-up speculation.
Whitbread’s share price has fallen into the red in today’s session, having given up 1.50 percent to 4,137.00p as of 13:29 BST, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.88 percent higher at 7,289.84 points. The group’s shares have been little changed over the past year, as compared with about a two-percent rise in the Footsie.
HSBC trims rating on Whitbread
HSBC downgraded its rating on Whitbread to ‘hold’ today, while maintaining its price target on the shares at 4,800p. Proactive Investors quoted the analysts as saying that they believed that both its Costa Coffee and Premier Inn units were past their peak and faced competitive and macro pressures.
“Up to 2015, Costa enjoyed supernormal returns as it benefited from its first-mover advantage and limited competitive pressures. The market has since caught on to the growth in coffee consumption and competition is hitting the company from all directions,” the broker elaborated, adding that while it viewed Premier Inn as a good asset, it was at the mercy of London and macro trends.
Other analysts on Costa Coffee owner
Stifel Nicolaus and Canaccord Genuity both reiterated their ‘buy’ rating on Whitbread this week, valuing the shares at 4,300p and 4,500p, respectively. According to MarketBeat, the Premier Inn and Costa Coffee owner currently has a consensus ‘hold’ rating and an average price target of 4,140p.