Broker snap: Deutsche Bank cuts Whitbread to 'hold' after strong run

23rd Oct 2013 10:20

Deutsche Bank has lowered its stance for Costa and Premier Inn owner Whitbread from 'buy' to 'hold', recommendation investors to 'consolidate and take stock' after a strong run. "Whitbread has had a great year", the bank said, with upwards revisions to business milestones and the company demonstrating strong operational outperformance again.Deutsche Bank has lifted its target price for the stock from 3,350p to 3,485p following Whitbread's forecast-beating interim results on Tuesday."The longer term growth and value creation story remains very much intact. We have laid out how one can get to 6,250p (+85%) by the end of the current Chief Executive Officer (CEO) milestone plan. "However, after 35% outperformance from the lows this year and with only 5% upside to our new target price (based on FY'15E), we are downgrading our recommendation from 'buy' to 'hold'."The bank said that upside risks for the stock include a faster achievement of mature revenues for the existing hotel estate. However it would likely come under pressure if the company is unable to develop the hotels pipeline as guided to in its 2018 growth targets - such as growing the number of Premier Inn rooms in the UK by 45% to 75,000 by that year.The stock was down 0.15% at 3,354p by 10:19 on Wednesday.BC