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Ladbrokes Coral and TUI slide on JP Morgan downgrade

Both firms had a good run last year but travel and gaming news is unlikely to be as supportive now, says the broker
hotel room
The hotel industry is unlikely to throw up positive surprises, especially in the USA, says JP Morgan

JP Morgan prefers catering stocks in the European leisure industry and has downgraded bookie Ladbrokes Coral Group (LON:LCL) and travel giant TUI AG (LON:TUI).

Both stocks had a good run last year but travel and gaming news is unlikely to be as supportive in the first half, says analyst Jaafar Mestari.

READ: Ladbrokes Coral and GVC Holdings in 'detailed' talks about £3.9bn merger

The hotel industry is unlikely to throw up positive surprises, especially in the USA, he added.

There the "real" RevPAR (revenue per available room)  is already 6% above its 2008 peak and is now the only region showing accelerating supply.

The broker has downgraded TUI  and Ladbrokes to 'neutral'.

READ: TUI delivers full year earnings growth on strong demand for hotels and cruises

It reckons the macro economic landscape is more supportive of stocks like Compass (LON:CPG) and SSP Group plc (LON:SSPG).

"An environment of stable wage inflation and slightly higher food inflation than in 2017 should allow organic growth rates towards the high end of the sector's historical range, and stable margins," it said.

Ladbrokes shares shed 1.46% to 183.375p, while TUI lost 0.03% to 1,577p.

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Ladbrokes Coral Group PLC Timeline

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