Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Wake up and smell the coffee: Citigroup chops rating for Whitbread to 'sell' from 'buy'

The US bank’s analysts said its Research Innovation Lab had “debunked the coffee growth myth” after assessing the performances of Costa, Caffe Nero, Starbucks and Greggs
Costa coffee cup
Based on the Lab’s findings, Citi reckons there is only four to five years structural growth left in the market for mochas and macchiatos

The London arm of US banking giant Citigroup was responsible for wiping almost £160mln from the value of Whitbread plc (LON:WTB) today with a downgrade to its rating in the owner of Premier Inn and Costa Coffee.

The stock fell as much as 3% early on as Citi moved straight to ‘sell’ from ‘buy’ on the stock.

READ: Goldman Sachs gives Whitbread a lift, upgrading its rating to ‘neutral’

Its valuation of 3,200p is around 690p lower than the current Whitbread price.

In a note to clients, the US bank’s analysts said its Research Innovation Lab had “debunked the coffee growth myth” after assessing the performances of Costa, Caffe Nero, Starbucks and Greggs.

Based on the Lab’s findings, Citi reckons there is only four to five years structural growth left in the market for mochas and macchiatos.

Meanwhile, the outlook for Premier Inns is even more grim with revenue per available room likely to grow 0.5%-2% in the period ended 2021, leading to “margin compression”.

At 10.00am, Whitbread shares were down 2.3%, or 88p at 3,688p.

View full WTB profile View Profile

Whitbread plc Timeline

Related Articles

Gamers playing
February 22 2017
PCG’s shares rocketed nearly 150% higher over a five-day period as a stock overhang created by its decision to draw a line under the CPDC purchase was finally cleared.
cruise ship
July 13 2017
“They are a fantastically talented group of people doing cutting edge work in the hospitality business”
golfer silhouette
January 12 2017
ZoomAway's technology allows travellers to bundle together accommodation with activities such as golf or skiing, and book it directly through the hotel's website

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use