Premier Inn owner Whitbread PLC (LSE:WTB) can be a “recession winner” according to analysts at Jefferies which has a ‘Buy’ rating for the hospitality stock.
The broker, in a note, highlighted Whitbread’s strategic focus on expansion and optimisation, with an eye on enhancing returns and deepening its economic ‘moat’, particularly in the UK and Germany.
"Whitbread is a recession winner with its budget price point, industry-leading price sophistication, beneficial supply conditions, and £750m of cash firepower,” Jefferies analyst team said.
"The company has a clear roadmap for further ROCE-accretive growth in the UK."
Helped by the brand power behind Premier Inn, the hotel operator benefits from cheaper customer acquisition compared to rivals – which rely heavily on third-party websites for bookings.
With 99% of Premier Inn website traffic coming directly, Whitbread benefits from lower customer acquisition costs and valuable customer data, Jefferies noted.
The broker highlighted that this approach not only supports its position in the UK but is also being adapted to suit the German market, where Whitbread aims to become the leading brand.
In terms of valuation, Jefferies points out that Whitbread's shares trade at a multiple of at 9.5 times the anticipated 2024 enterprise value to earnings (EV/EBITDA), compared to a pre-COVID average of 10.2x.
Jefferies Buy rating pitches a price target of £44.00, suggesting around 25% upside compared to its current trading price of around £35.23.