Coronavirus - we're here to help
From how to access your account online, scam awareness, your wellbeing and our community we're here to help.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log in to HL Account

Berenberg upgrades Whitbread to 'buy'

Fri 16 October 2020 09:57 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Analysts at Berenberg upgraded their rating on hotel operator Whitbread from 'hold' to 'buy' on Friday, stating the current price of the stock left the group undervalued given its real estate portfolio.

Berenberg said that following Whitbread's recent weakness, it believes that the risk-reward balance on the company had shifted meaningfully.

The German bank thinks Whitbread's shares were now reflecting a 50% discount on its real estate and while it acknowledged that the stock traditionally traded on the operating performance of the business, it reckons that the real estate underpins the value and that the current level of discount was overdone.

Berenberg, which raised its target price on the stock from 2,400.0p to 2,500.0p as a result of a "slightly improved" cash burn, said its new price target also reflected a 40% discount and implied a 15% upside.

"If we assume a 40% discount to our pre-Covid-19 valuations for the real estate and invested capital in Germany, and a 20% discount on the Premier Inn brand, then this also implies a fair value of £25. We adopt this as our price target for Whitbread," concluded the analysts.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.


    More stockbroker tips from ShareCast

    Latest economy and stock market articles