Whitbread removed from Goldman Sachs' Pan-Europe Buy List

Goldman Sachs has removed Whitbread from its Pan-Europe Buy List, downgrading it from ‘buy’ to ‘neutral’ on the back of its third quarter results.

The investment bank said on Monday that UK revenue per available room (RevPAR) growth for the FTSE 100 company, which owns hotel brand Premier Inn, has slowed.

The four week average RevPAR is down to 2% in the regions and down to -2% in London.

“While RevPAR is volatile, reassessing the cycle suggests the regions could be suffering overshooting, while we expect the ongoing growth of Airbnb, sterling strength, and geopolitical risk to further impact London.”

However it did note that the company has strong organic growth prospects.

“Whitbread’s portfolio growth contributes c.8% pa to revenues 2016-19E, underpinned by its strong position and the structural trends in key markets.

“Premier Inn (64% of FY16E EBIT) is the largest budget-branded hotel network in the UK and is growing market share. Costa is the largest coffee shop chain and benefits from its value proposition, increasing consumption/capita, and mix shift to fresh coffee and brands.”

Goldman Sachs revised its price target down from 6,105p to 4,990p due to changes to its estimates.

“We lower our cyclical growth assumptions (LFL RevPAR to 2%), leading our 2016-19 EPS down 8% on average. Our 2017 EBIT is 5% below Bloomberg consensus.”

Shares in Whitbread were down 3p (0.07%) to 4,397p at 1135 GMT.