Whitbread raised to 'equalweight' by Morgan Stanley

17th Jun 2015 10:26

Morgan Stanley raised Whitbread to 'overweight' from 'equalweight', noting the stock is cheaper than peers, but offers superior and more visible growth.MS said the stock is now trading well below its unchanged price target of 5,800p."Whitbread has leading positions in growth markets, is generating double-digit earnings per share growth through strong unit expansion, and offers balance sheet optionality," said the broker.It said that the recent pullback in the shares, while understandable, puts them at a 5-15% price-to-earnings valuation discount to Accor and InterContinental Hotels Group, yet Whitbread has stronger and more visible growth."We think capex will drive 10% annual EPS growth and we forecast mid to low teens EPS growth including like-for-like growth, so we think the shares can sustain their high multiple for as long as this growth comes through."At 12:13, shares were up 0.1% at 5,075p.