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(Sharecast News) - Shore Capital upgraded On the Beach on Tuesday to 'buy' from 'hold' as it said risk was now priced in.
The broker said that so far, FY26 has been mixed for OTB. "There has been continued volume outperformance but weaker earnings delivery, amid geopolitical disruption and a shift to later booking patterns, which have weighed on ABV and visibility," it said.
"This has led to a reset of FY26F expectations, with guidance now significantly below prior levels. We have updated our forecasts accordingly."
In its interim results, OTB downgraded FY adjusted pre-tax profit guidance to between 18m and 25m, from between 39m and 43m previously. Shore said it has cut its FY26 pre-tax profit forecast from 42m to 21m, based on continued ABV trends of -4%, 8% bookings growth and a lower conversion rate.
Shore said that with the share price down more than 30% year-to-date and an EV/EBITDA of just 5.5x, the risk is more than priced in, along with a lack of value for the key growth divisions progress.
At 1237 BST, the shares were up 2.4% at 154.60p.
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