Shares in the travel catering operator rose after UBS said improving working capital discipline and lower capital spending should translate revenue growth into “much improved” cash generation, and raised its price target to 245p
SSP Group plc (LSE:SSPG) shares rose 6% to 201.6p after UBS upgraded the travel catering company to 'buy' from 'neutral', citing improving cash generation and a stronger near-term demand backdrop in aviation.
UBS said SSP’s “focus on cash flow generation, if successfully executed, would likely ease a primary market concern”, and forecast free cash flow of £102 million in 2026, rising to £154 million by 2030.
The bank raised its 12-month price target to 245p from 180p, saying the move was “primarily driven by stronger cash flow generation” linked to better working capital management and modestly lower capital expenditure.
UBS said catch-up capital spending was now behind the group and that the share of profits paid to minority partners was declining, which it argued should leave more cash available to equity holders.
Airline capacity growth looked set to support higher near-term organic growth, UBS said.
The bank forecast leverage of 1.5 times net debt to earnings before interest, tax, depreciation and amortisation by the end of 2026, and estimated scope for additional buybacks of about £190 million if the company moved pro forma leverage to the top of its target range.
UBS also pointed to potential catalysts, including a review of underperforming European rail operations and possible value realisation from SSP’s listed Indian business.