Broker snap: Consensus forecasts for Whitbread 'too optimistic', says Panmure

21st Oct 2013 10:46

Analysts at Panmure Gordon recommended investors 'sell' shares of Whitbread ahead of the company's interim results on Tuesday.The Costa and Premier Inn owner reported last month that like-for-like sales grew by 2.1% in the 11 weeks to August 15th. However, Panmure pointed out that the hotel division's 2.5% revenue per available room (RevPAR) growth in the UK - which accounts for around 85% of the group's rooms - underperformed the peer group which saw RevPAR increase by 6.4%."Looking ahead, we believe consensus is too optimistic on RevPAR growth at Premier Inn given the increasingly strong performance from Travelodge and Accor (Ibis)," it said.As for Whitbread's fast-growing Costa coffee chain, Panmure said that it is "approaching saturation in the UK whilst the international business is being deprived of the investment needed to capitalise on the growth opportunity".The broker forecasts a 9% increase in first-half pre-tax profit to £211m, equal to earnings of 89.9p per share, assuming revenue growth of 12%.It maintained its negative stance on the stock with a target price of 2,644p, implying 19% potential downside from current prices."The current share price can only be justified by putting Whitbread Hotels & Restaurants on the same multiple as InterContinental Hotels and Costa on the same multiple as Starbucks. We think both constituent parts should trade at a discount to these peers and therefore reiterate our 'sell' recommendation."BC