Whitbread PLC (LSE:WTB) has secured an estimate upgrade from Jefferies, as resilient UK hotel demand prompted the broker to raise its price target while keeping its cautious rating intact.
The shares climbed 1.13% to 2,503p as Jefferies maintained its 'hold' rating, noting that the valuation already reflects most of the headwinds, alongside limited near-term earnings power.
At the core of the revised note is a stronger-than-expected run of UK revenue per available room, driven by solid forward bookings that continue to outpace the wider hospitality industry.
That operational momentum spurred the broker to bump its adjusted earnings per share sequence 3% to 4% higher, setting its first-half profit expectations slightly ahead of market consensus.
Despite the revenue resilience, the hotelier's first-half pre-tax profit is projected to drop 11% to £282 million, as UK operating leverage is offset by net cost inflation and higher lease costs.
Those domestic pressures are compounded by £10 million in one-off conversion costs in Germany, as well as a financial drag from its Middle East joint venture.
Shifting focus from the balance sheet, analysts expect a strategic update on the company's property disposal programme, which has already sold 51 restaurants since June.
That ongoing restructuring drive is expected to reduce food and beverage sales by £140 million to £160 million while simultaneously adding 750 new hotel rooms to the portfolio by the end of the year.
The ultimate wild card remains a pending review into hospitality business rates, with findings expected next March potentially impacting Whitbread's projected £110 million rates burden over the coming financial years.
