Broker snap: Whitbread rating unaffected by higher input prices

7th Mar 2011 11:00

Nomura trims earnings estimates at Whitbread due to increased costs, but revenue assumptions are unchanged and the broker keeps its 'buy rating.Fourth quarter revenue for the hotel, coffee shops and pubs group was in line with expectations and full year turnover is likely to show a like-for-life (LfL) growth of 7% to £1.6bn, according to the Japanese broker."However, revenue flow-through to earnings before interest and tax (EBIT) in the second half is likely to be lower than our previous assumption owing to higher input costs," says analyst Simon Larkin.While the Coffee Nation acquisition adds around £4m to 2012 EBIT, the broker reduces group 2011 EBIT forecasts by 3% to £315m, from £324m, and by 1-2% beyond.In spite of EBIT reductions, the exit LfL revenue run rate from the fourth quarter is line with Nomura's assumptions for 2012. The target price is lowered to 2,175p, from 2,180p.