Goldman Sachs gave a lift to Costa Coffee and Premier Inn owner Whitbread PLC (LON:WTB) today, upgrading its rating to ‘neutral’ from ‘sell’ on valuation grounds.
The US bank left its target price for the FTSE 100-listed stock unchanged at 3,900p, offering around 2% upside to the current share price of 3,858p, which was 1.7%, or 65p higher in morning trading.
READ: Whitbread makes good start to the year
In a note to clients, Goldman’s analysts pointed out that Whitbread’s shares have underperformed amid worries about UK macro trends and the consumer environment.
They noted the possibility of a stronger-than-expected improvement in Premier Inn’s revenue per available room (RevPAR) trends from a better-than-expected share in tourism or a pick-up in business activity.
Back in June, Whitbread reported a good start to the year, with strong growth in sales at Premier Inn, and although Costa Coffee saw its growth slow, it was largely in-line with estimates.
In a trading update for the 13 weeks to June 1, the FTSE 100-listed firm reported total like-for-like sales growth of 2.9%, with Costa Coffee seeing a 1.1% rise, while Premier Inn posted a 4.7% like-for-like sales increase.
In Whitbread’s full-year results back in April, Premier Inn had seen like-for-like sales growth of 2.3%, while Costa Coffee’s UK like-for-like store sales were up 2.0%.