Cannaccord Genuity warns of tougher comparatives for Costa owner Whitbread

11th Dec 2014 11:26

Cannaccord Genuity has maintained a 'hold' recommendation on Whitbread despite an in-line trading update from the Costa and Premier Inn owner on Thursday, warning of tougher comparatives ahead of the leisure company.Third-quarter sales increased by 13.2% year-on-year, while like-for-like (LFL) sales rose by 6%. Analyst Nigel Parson said that all three of Whitbread's divisions - Costa, hotels and restaurants - contributed positively on every metric.LFL growth slowed down slightly from the first half, though this was compensated for a pick-up in total sales.However, Parson said that LFL growth would likely slow further in the fourth quarter."Whitbread's share price has become the sector bellwether for the UK consumer and we like its budget hotels and coffee shops rollout strategy a lot, but the share price is slightly too frothy for us to be more positive now," the analyst said."So, what would make us more bullish, assuming no dip in share price? The answer is demerging Costa, although we see no sign of this happening soon," he said.Cannaccord kept a 4,300p target price for the shares, which were up 0.1% at 4,575p by 11:32.The shares have gained 22% since the start of 2014, compared with a 4% fall for the wider FTSE 100.