JPMorgan reiterates ‘overweight’ on Whitbread

JPMorgan Cazenove reiterated its ‘overweight’ rating on Whitbread on Friday as it said it continues to be one of its key convictions, and sees the recent pullback - the shares are down 20% year-to-date - as "an opportunity to revisit the story".

"Whilst we understand concerns around softer RevPAR momentum in the UK, we see the derating as excessive in the context of Whitbread’s new plan (AGP: Accelerated Growth Plan) suggesting double digit percentage pre-tax profit upgrades from FY 27e onwards - our estimates and analysis suggest there is upside, which is not currently accounted for in consensus estimates," it said.

The bank said Whitbread’s plan suggests "meaningful" upside to consensus estimates, while rejuvenating the proposition and driving premiumisation, reinforcing its leadership further.

JPM said the pullback in the shares was "excessive", underperforming Accor and InterContinental Hotels by more than 30%.

"We see the current share price weakness as a compelling buying opportunity, with the shares back to the March ‘23 lows and below the average share price in 2021, somewhat pricing in the recent UK RevPAR weakness and none of the AGP-related positive outcome, all of which comes at the time of decent progress in Germany," it said.

JPM said that multiples-wise, the shares trade on circa 8x EV/EBITDA FY 26e, around 20% below the historical average, versus 11x/15x for Accor/IHG respectively.

The bank has a 4,200p price target on the shares.