Berenberg lowers target price on Hostelworld

(Sharecast News) - Berenberg cut its price target on Hostelworld to 150p from 171p on Wednesday, citing a weaker Q3 shaped by geopolitical headwinds, though it kept its 'buy' rating on the stock and said the group's shift to its socialdriven platform continues to underpin the longterm investment case.

The German bank said the prolonged Middle East conflict weighed on Q3 trading, prompting it to lower FY26-28 underlying earnings forecasts by 16%, 28% and 24%, assuming a worstcase scenario of no improvement through FY27-FY28.

Even so, Berenberg argued that the social platform remains a key structural growth driver, with social transactions up 10% yearonyear in the quarter and now accounting for around twothirds of total bookings.

Q3 net revenue rose 7% to �27.9m, supported by an 11% increase in average transaction value on the back of higher commission rates. Total transactions fell 2%, reflecting a 1% drag from the Middle East conflict, a 1% hit from weaker longhaul travel between Europe and the Americas, and a 1% impact from changes to AI search behaviour. Adjusted EBITDA, however, still grew 4% to �8.3m, with a 30% margin and net cash of �3m.

Berenberg highlighted continued strength in app bookings, up to 64% of bed nights, and said increased marketing investment to drive socialcustomer growth was delivering strong payback. Management now assumes no improvement in Middle East conditions through FY26-FY27, guiding to FY26 EBITDA of �20m to �21m and midsingledigit revenue growth next year.

The analysts also cut their revenue growth forecasts to 10% for FY26 and 4% for FY27-FY28, but said the shares still look inexpensive at around 10x FY26 earnings, with upside if geopolitical pressures ease.

Reporting by Iain Gilbert at Sharecast.com