Whitbread PLC's (LSE:WTB) new strategy has drawn a cautious response from UBS, which warned that the hotels group is “playing the long game when investors may want the short game”.
The Premier Inn owner last week set out a new five-year strategy, which rejected a range of more aggressive suggestions, including a full sale and leaseback of its hotel estate, going asset-light, or selling its German business.
Besides ramping up in sale-and-leaseback activity, analysts said the new plan was "catalyst lite for those investors that were expecting greater near term financial engineering."
UBS slashed its price target to 2,975p from 3,575p, retaining a 'buy' rating on shares that have fallen around 10% this year and were trading at 2,296p on Thursday.
The bank now forecasts pre-tax profit of £390 million for the year to February 2027, down from a previous estimate of £442 million, with earnings per share cut by 15%.
UBS also identified around £55 million of unexpected headwinds for 2027, including a £40 million drag from Whitbread's 'accelerating growth plan' to restructure its food and beverage estate, a £10 million hit from Germany, and a £5 million impact from the Middle East conflict.
Despite the cuts, UBS said Premier Inn remained the UK's dominant budget hotel brand and saw scope for continued market share gains as independent rivals face mounting cost pressures.