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(Sharecast News) - Shore Capital maintained its 'buy' rating on On the Beach on Thursday after it delivered a "strong" FY26 outcome.
OTB said it expects FY26 adjusted pre-tax profit of £22m to £23m, in the top half of the £18m to £25m guidance range given at the first-half results. Shore said this was ahead of its forecast of £20.6m, with the mid-point up around 9%.
"Importantly, trading momentum appears to be carrying into FY27F," the broker said, noting that total bookings over the last eight weeks have grown 17%, and that management has introduced FY27F adjusted pre-tax profit guidance of £28m to £35m, equivalent to growth of around 25-55% versus FY26.
"Whilst the double digit profit is, in our view, notable, we highlight this is lower than consensus and our forecasts (SC: £36m, and consensus ranging as high as £39m), with ongoing uncertainty in the Middle East along with uncertainty surrounding the UK consumer backdrop referenced as reasons," Shore said. The broker downgraded its FY27 pre-tax profit estimate by 11% to £32m.
"Overall, this update reiterates the combination of market share gains, accelerating booking momentum, strong cash generation and a confidence in ongoing profit growth, albeit softer than expectations," Shore said. "Trading on a low-mid single digit EBITDA multiple, we retain our buy recommendation."
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