Whitbread PLC (LSE:WTB) shares slipped as much as 9% on Friday after Bernstein delivered a stinging double downgrade, cutting its rating from 'outperform' to 'underperform' and slashing its price target to 2,500p from 3,600p.
Citi also trimmed its forecasts, saying fresh analysis of the government’s new business-rate system pointed to a material hit to Whitbread’s future profits.
The bank said that, based on its revised estimates, the updated regime could reduce adjusted EBIT in FY29 by around 5%, driven by an extra £43 million in business rates payments.
Citi added that even if Ireland, Scotland and Wales adopted similar valuation methods and revaluations, the overall impact would be broadly unchanged.
The main unknown, it said, is how many of Whitbread’s hotels would be valued at more than £500,000. Citi currently estimates this at 110 sites but stressed that the figure carries “significant potential error” because of gaps in public data and the absence of confirmation from the company.
The bank’s analysis followed feedback from recent industry conferences and week-on-week trends showing a modest improvement in revenue per available room, or RevPAR.
Even so, concerns over higher operating costs and the potential hit from the business-rates overhaul have overshadowed those gains.
Whitbread has yet to comment on the impact of the new regime, leaving the market to rely on broker modelling at a time when visibility remains low.
After the initial lurch downward, the shares settled at 2,677p, down 5%.