Citi downgrades On The Beach after share price jump

Citi downgraded its stance on shares of package holiday provider On The Beach on Tuesday to ‘neutral’ from ‘buy’ following the 29% share price rise a day earlier on the back of positive news about Pfizer and BioNTech’s Covid-19 vaccine.

The jump meant the share price exceeded Citi’s previous target price of 340p, which has now been boosted to 370p.

"We believe it is fairly valued here, at long-term average online travel agency multiples on our FY22E estimates," the bank said.

Citi said recent vaccine news gives it confidence in assuming FY22E demand normalisation.

"However we expect FY21E to be a transition year, with winter trading currently challenged, potential vaccine rollout through the year and uncertainty around population uptake and immunity longevity," it said.

The bank therefore assumes FY21 net revenue at 65% of the 2019 level.