Whitbread slumps on Barclays downgrade

The bank pointed to slower UK revenue per available room (RevPAR) growth, deteriorating leading indicators and reduced corporate capex expectations from its economists.

It said that while Whitbread remains a high-quality, long-term growth story with a compelling total shareholder return, its positive view had in part been predicated on its belief that RevPAR growth could beat consensus given the various data points it tracks.

However, Barclays now reckons these indicators may be delivering the opposite message.

“As such we now consider the shares to be more ‘fairly valued’ than ‘cheap’ on a 12-month view. Additionally we are cautious going into the Q3 IMS on 10 December,” it said.

Barclays said that while the third quarter overall should see good RevPAR growth of around 5%, helped by the Rugby World Cup, the RevPAR exit rate is somewhat concerning.

The bank’s tracking model shows a slowdown in UK regional RevPAR growth to 2.2% in November versus around 4.2% in September.

Barclays cut its earnings per share estimate by 1.5% for 2016/17 leaving it around 1.5% below consensus. The cut reflects lower RevPAR growth and restaurants LFLs.

At 0900 GMT, Whitbread shares were down 3.3% to 4,557p.