Jefferies upgrades Whitbread, downgrades InterContinental in leisure overview

The bank said that the successful rollout of a vaccine programme would "transform" the leisure sector’s prospects. "Vaccines offer investors the prospect that a new normality can resume, at some point. We look beyond short-term restrictions and assume that UK restrictions will lift by the third quarter of 2021."

It argued that key beneficiaries included Cineworld, Jet2, Mitchells & Butlers and JD Wetherspoon, with the assumption that UK restrictions will end by the third quarter and liquidity is sufficient until then.

Jefferies said: "Recovery will vary by sub-sector - pubs rapid, hotels slow. We upgrade Whitbread to ‘buy’ and downgraded InterContinental Hotels and On The Beach to ‘underperform’."

William Hill was downgraded to ‘hold’, but gaming remains Jefferies' favoured leisure sub-sector. "The summer return of sports fixtures saw sports betting bounce back. Liquidity is robust, with dividends on the radar. US sports betting and iGaming is multi-year, high growth prospect. Vaccines will drive increased sports content. UK regulation remains a near-term risk," it said.

Across tour operators, which have rallied following the emergence of a Covid-19 vaccine, Jefferies argued that the market now needed to "differentiate between operators positioning for recovery".

"We bring forward our recovery assumptions to 2022, but not everyone is a winner. Jefferies Data analysts highlights players that are gaining or losing share for 2021, ballooning time to pay invoices and diverging brand perception," it said.