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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.
Reporting by Iain Gilbert at Sharecast.com
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