Canaccord upgrades Whitbread on growth potential at Costa, Premier Inn

12th Jun 2015 09:29

Canaccord Genuity has lifted its recommendation on Costa and Premier Inn owner Whitbread from 'hold' to 'buy', saying it sees upside with the group on track to hit its medium-term targets.Analyst Nigel Parson said Whitbread's market-leading positions via Premier Inn and Costa mean the company is "well placed to achieve its new 2020 milestones of 85k UK hotel rooms and £2.5bn of Costa system sales"."Indeed, we believe both divisions could grow strongly for at least a decade before investors need to worry about hitting market saturation," he said.Furthermore, this should be more than enough time for Whitbread to expand internationally, turning its current overseas operations into "significant growth drivers".The broker has hiked its target price to 6,000p from just 4,300p previously."It's a big hike in our target price but our analysis reassures us that there really are big opportunities for Whitbread's Premier Inn and Costa Coffee. Execution is excellent and these brands are well-known and well-liked," Parson said.Whitbread was trading 0.5% lower at 5,080p by 09:44 on Friday, pulling back slightly after a 2.5% rise since the start of the week.