Berenberg has upgraded On the Beach Group (LSE:OTB) to a 'buy' rating (from 'hold'), expecting sunnier times ahead for the online travel agent.
As the name suggests, the company's focus on beach holidays and limited inventory risk are key strengths. Despite a 20% drop in share price this year, Berenberg believes OTB can grow its market share, especially in the long-haul and premium holiday segments.
For the financial year 2024, Berenberg predicts strong earnings, supported by a 22% increase in summer bookings compared to last year. It sees potential for OTB to beat current market expectations by 5%.
The company's recent partnership with Ryanair removes significant risks and improves supply access, the German bank reckons.
Berenberg's target price remains at 180p (current price 140.4p, up 1.9%), indicating confidence in OTB's strategy and market position.
It highlights the company’s ability to directly obtain hotel room supply and differentiate its platform with perks for premium holiday bookings. OnTheBeach's expansion into the premium and long-haul markets is expected to drive growth in the medium term.