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(Sharecast News) - Canaccord Genuity lowered its price target for Hostelworld to 185p from 205p on Thursday, turning more cautious on nearterm trading as the ongoing Middle East conflict continues to weigh on volumes, though it said the group's longerterm structural growth story remains intact.
The Canadian bank said Hostelworld's FY26 interim results broadly confirmed recent trends, with the business returning to doubledigit growth driven by higher commission rates through its Elevate tool. However, Canaccord now expects 11.8% net revenue growth for FY26, down from 14% previously, reflecting a more conservative view on secondhalf volumes.
In the first half, net revenues rose 12% to 52.2m, supported by an 11% increase in revenue per transaction and 1% growth in net transactions, while adjusted underlying earnings grew 11% to 8.2m and adjusted pre-tax profits slipped 3% due to higher amortisation as Hostelworld continues to invest in social features and thirdparty inventory integration. Fullyear guidance for low doubledigit revenue growth was maintained.
Canaccord, which reiterated its 'buy' rating on the stock, highlighted strong monetisation via Elevate, rising bed rates and favourable geographic mix, and noted that thirdparty inventory has yet to make its full contribution. It also pointed to improved user economics from Hostelworld's social strategy, with social members generating 35 of cumulative net margin versus 6 for standard users.
Despite nearterm caution, Canaccord said Hostelworld's shares remain attractively valued at a 6.4x FY26 enterprise value-to-underlying earnings ratio and an 8% free cash flow yield.
Analysts at Berenberg lifted their stance on Rio Tinto to 'buy' from 'hold' on Thursday and raised their target price on the stock to 8,600p from 8,100p, arguing that investors have a tactical opportunity to rotate out of BHP after its strong yeartodate run.
Berenberg said BHP's 39% year-to-date gain versus Rio's 16% reflected Australialisting dynamics and sector rotation, but on fundamentals it said Rio now looked to be the more attractive major.
The German bank highlighted Rio's stronger free cash flow yield of 7% versus BHP's 5.5% over 2026-28 and higher dividend yield of 5.4% versus 3.1%, alongside a cheaper valuation at 5.3x threeyear forward enterprise value-to-underlying earnings compared with BHP's 6.8x.
It added that Rio was exiting a heavy capex cycle just as BHP was entering one, with projects such as Oyu Tolgoi and AP60 now largely complete, with rampups set to lift Rio's copper volumes by around 19% by 2028. BHP, meanwhile, faces rising spend at Jansen, Copper South Australia and Vicua, with flatter nearterm volumes and greater risk of cost overruns.
Berenberg also welcomed Rio's H1 results, noting management's renewed focus on productivity and portfolio value creation, including plans to unlock $5bn to $10bn from noncore disposals.
"After a broad sector pullback, we like Rio's valuation, cashflow generation and setup versus BHP," said Berenberg, which noted the shares currently trade on 1.33x net asset value and 5.5x FY26 EBITDA.
Reporting by Iain Gilbert at Sharecast.com