Broker snap: Premier performance by Whitbread

22nd Jun 2010 13:21

The interim management statement from hotels, restaurants and coffee shops owner Whitbread was exceptionally strong, Panmure Gordon said, with encouraging signs of a turnaround at Premier Inns."Encouragingly, Premier Inn LFL [like for like] RevPar [revenue per available room] has increased 9.1% over the period, the first positive quarter for 18 months," the broker noted, though over a two year time frame LFL RevPar is still down 0.5%.Despite the strong trading statement the broker is not expecting any changes to consensus forecasts at this early stage of the financial year. The broker has strongly reiterated its "buy" recommendation and kept its sum of the parts based 1935p price target. KBC Peel Hunt was slightly less effusive about the statement, calling it a "solid update". "The strategy to increase investment in marketing is clearly paying off at the top line, but ultimately it will be what is retained at the bottom line that determines how successful it is," KBC analyst Nick Batram asserts. "The top line is ahead of expectations and the question is how much of this has been soaked up by the increased investment in marketing? Our feeling is that there might be room to nudge our profit number higher. Whitbread has proven itself in a recession and, given the positioning and quality of the businesses, we see no reason why the group will not outperform in a recovery," the broker said.KBC Peel Hunt rates the shares a "buy"; its price target is under review.