Whitbread PLC (LSE:WTB) impressed at its interims and the results have gone down well in the City with shares top of the FTSE 100 risers, up 2.5%.
Jefferies said the results were “strong” with sales a 1.4% beat and adjusted pre-tax profit a 14.5% beat against consensus.
It thinks the further £300 million of buybacks announced this morning should be taken well and it estimates a 10-11% upgrade to financial 2024 EPS forecasts today.
It highlighted current trading appears strong with the 6 weeks to 12 October growing 12% in the UK with the only negative some softness in the German market over the summer.
“We see re-rating potential from a stronger business model, benign supply conditions and greater reinvestment potential vs history. We also see scope for further earnings momentum in the year” Jefferies said.
It reiterated its buy rating.
As we reported earlier Shore Capital was also upbeat on Whitbread, reiterating a buy rating.
“We continue to see such valuation as too low given the robust trading, leading market position, freehold rich and debt-free estate, attractive return metrics and medium-term opportunities,” the broker said.
It said the better than expected profit was driven by the UK (up £90 million), reduced German losses (£11 million) and net interest income (£24 million).
It also sees scope for further buy-backs of more than £1 billion over the medium term.
Peel Hunt is also a buyer with a 4,000p price target.
“While there are clearly concerns over this cyclical business for FY25E and beyond, we can see the scope for upgrades for this year as competitors come under further pressure,” it said.