Hargreaves Lansdown sees Whitbread (LON:WTB) as a ‘slower and steadier’ business following the sale of its Costa Coffee unit to The Coca Cola Company, Citywire reports. The comments came as the analysts weighed in on the Premier Inn owner’s results yesterday.
Whitbread’s share price fell in the previous session, giving up 1.52 percent to close at 4,396.00p. The shares marginally underperformed the broader market selloff which saw the benchmark FTSE 100 index close 1.24 percent lower at 6,955.21, pressured by geopolitical tensions and Brexit worries.
‘Slower and steadier’ business
Citywire quoted Hargreaves Lansdown analyst Laith Khalaf as commenting yesterday that while sales at Whitbread’s existing Premier Inn hotels were flat, that was not ‘to be sniffed at’ given the difficult economic environment. The group’s revenue meanwhile climbed 2.6 percent to £1.08 billion in the first half of its financial year.
“Whitbread isn’t going to stop their either, with a further 13,000 new rooms in the pipeline, and the introduction of a new super-budget Zip format, which will launch in Cardiff next year,” the analyst continued, adding that the real growth opportunity was in Germany where the hotel market was 35 percent larger than the UK.
“That expansion plan will be helped by the cash flowing in from the sale of Costa to Coke for £3.9 billion,” Khalaf pointed out, noting that “Whitbread will be a slower and steadier business once Coke has swallowed Costa”.
Other analysts on Whitbread
Kepler Capital Markets and Liberum Capital both reaffirmed Whitbread as a ‘hold’ in the wake of the results, without specifying price targets on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 4,565.88p.