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(Sharecast News) - RBC Capital Markets reiterated its 'outperform' rating on On The Beach on Tuesday, saying "it looks like a time to buy".
The bank said the recent selloff in OTB shares is unjustified, with circumstances out of the group's control driving temporary pressure.
RBC said OTB has suffered from industry wide issues, the later booking cycle that saw it warn in September, followed by the outbreak of the Iran war in March.
It noted that the group was growing volumes by around 10% and trading in line with expectations before the war and has seen volume growth recover to 9% in the last six weeks.
"The pricing environment continues to be challenging, with distressed inventory more commonplace than usual," RBC said. "City breaks have been a clear strength, with bookings growth of 116% and growth in Ireland as a source market of 74%."
It also said that a "big opportunity" remains in the cruise segment. RBC said OTB has entered the space in a low cost and thus low risk manner.
"The legacy small operators in this space largely use legacy tech, the group sees no reason it couldn't take material share of the segment over time," it said. "As a reminder, ATV is higher in cruise than beach, as is the commission rate the group receives. Cruise will likely also be released in the Irish market in the coming months."
RBC said it was updating its estimates to take a more cautious view in both FY26 and FY27, before a more bullish approach to recovery in FY28.
It said the group is currently trading on 2.6x FY28e EV/EBITDA, and it values it at 6.5x, driving a 15p reduction to the target price to 290p.
At 1320 BST, the shares were up 4.4% at 137.80p.
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