Credit Suisse hails German potential at Whitbread, hikes target price

17th Apr 2015 11:44

Credit Suisse has hiked its target price for Costa and Premier Inn owner Whitbread from 5,300p to 6,200p and kept an 'outperform' rating, saying the leisure group provides "long-term sustainable quality growth".The bank said that the roll-out plans of the company's two largest chains underpin forecasts for operating profits increasing at a compound annual growth rate of 13% over the next five years, compared with the 7% average seen at its peers.Furthermore, Credit Suisse's "bullish assessment" of Premier Inn's potential to expend in German should help sustain growth well beyond 2020, it said.The bank estimates that Premier Inn will have 12,000 rooms in Germany by 2025, generating 7% of the chain's operating profits. However, if the Germany growth trajectory matches the UK like in 1997, 31,000 rooms could be possible, representing 18% of operating profits.The home market of the UK, meanwhile, "continues to offer significant growth potential", Credit Suisse said.Whitbread was down 0.1% at 5,220p by 12.20.