Berenberg downgrades SSP to 'hold'

Berenberg downgraded its stance on shares of Upper Crust owner SSP to ‘hold’ from ‘buy’ on Thursday and cut the price target to 180p from 280p as it said first-half results outlined earnings risks.

"We are fans of the global travel concession market and believe that the structural growth drivers in the industry will support the growth of SSP into the medium term," the bank said.

"That said, we think the majority of the group’s growth will now stem from North America and the rest of the world (RoW - i.e. Asia-Pacific, eastern Europe and the Middle East), where the business has significant minority interests.

"Given the potential headwinds to the UK&I (UK & Ireland) rail business, we believe that there are risks to earnings generation over the medium term, with a greater share of SSP’s profitability generated in regions with high minority interests."

This has led Berenberg to cut its earnings per share forecasts and it now sits below consensus EPS in FY24, FY25 and FY26.

"Given this potential headwind to near-term earnings, we downgrade our recommendation to hold, with a new price target of 180p," it said.

At 1335 BST, the shares were down 6.4% at 149.70p.