Broker snap: Credit Suisse downgrades Whitbread to neutral

30th Jan 2012 09:52

Credit Suisse has cut its rating for hotel, restaurant and coffee shop group Whitbread from outperform to neutral, saying that downside risks on increasing.The broker says that Whitbread is the "most consensual buy amongst European hotel stocks" and the stock has outperformed its hotel peers by 15% over the last six months (outperforming the UK leisure sector by 13%)."However, we see risks rising principally for Premier Inn which leads us to assume a 2% FY13 RevPAR [revenue per available room] decline and leaves our EPS [earnings per share] estimates 7% below consensus."Upside risks from Whitbread's defensive characteristics include its asset backing and exposure to the London Olympics; but with just an 8% upside seen to its 1,818p target price, the broker thinks the risk/reward is now less compelling, hence the downgrade.Shares were trading down 2.13% at 1,654p on Monday morning.BC