Shares in Whitbread (LON:WTB) have climbed higher in London in today’s session as Barclays hiked its stance on the Premier Inn owner. The move came after the company wrapped up the sale of its Costa Coffee business to The Coca Cola Company yesterday, landing £3.9 billion in cash.
As of 13:53 GMT, Whitbread’s share price had added 2.09 percent to stand at 4,681.00p. The shares are outperforming the broader UK market rally which has seen the benchmark FTSE 100 index add 1.42 percent to 6,787.94 points so far today.
Barclays lifts stance on Whitbread
Barclays lifted its rating on Whitbread to ‘overweight’ today, and hiked its price target on the shares from 5,000p to 5,200p, following the completion of the Costa Coffee sale.
“Clearly there are significant risks surrounding the macro outlook and consequently the group’s earnings profile,” the analysts pointed out, as quoted by the newswire, adding, however, that they believed that the risk/reward was now skewed to the upside. The broker further reckons that the group’s shares are likely to be “supported by the £500-million share buyback and the fact that 35 percent of the market cap is effectively cash”.
Whitbread is scheduled to hold its capital markets day on February 13 and Barclays expects that the group will announce a tender offer for £2.5 billion, new cost cuts, an update on its plans in Germany and a capital structure target with potential £1 billion firepower for acquisitions.
Other analysts on Premier Inn owner
Royal Bank of Canada initiated coverage on Whitbread with a ‘sector performer’ rating last month, valuing the shares at 4,700p. According to MarketBeat, the Premier Inn owner currently boasts a consensus ‘buy’ rating and an average price target of 4,745.29p.