logo-loader
WH Smith PLC

City broker “really excited” by WH Smith’s US potential now InMotion is onboard

“Our knee-jerk reaction to the InMotion deal was upbeat and, the more that we look at it strategically, the more excited we become,” said Peel Hunt analysts

headphones in store
The addition of InMotion doubles the size of WH Smith’s international business

Peel Hunt analysts are “really excited” by WH Smith PLC’s (LON:SMWH) recent US$200mln acquisition of InMotion, a market leading retailer of digital accessories in US airports.

The purchase gives WH Smith access to the US travel market, the largest and most lucrative of its kind.

READ: WH Smith expands travel business into US with US$198mln acquisition of InMotion

To give some idea of its sheer size, there were 285mln trips through UK airports last year. In the US, there were 1.7bn, and that figure is set to rise to 2.2bn by 2022.

“It’s impossible to be described as a global travel retailer without access to the US,” wrote Peel Hunt in a note to clients. “The deal, at a stroke, doubles the size of WH Smith’s international arm.”

The analysts add that InMotion’s relationships with landlords across the pond can “unlock the door” to WHS’s core travel format – the part of the business that’s been keeping the rest afloat – appearing in the US.

On the flip side, under WHS’s wing, they expect InMotion will be rolled out across other territories.

“Local competition will commonly be tough as InMotion expands but its increased scale should ensure a pricing advantage.”

Initial market reaction ‘stingy’

WH Smith shares rose 6% yesterday (Tuesday), but Peel Hunt reckons that was a little underdone, given the benefits the purchase brings.

“The shares reacted well to the deal but didn’t re-rate. After a long period under a cloud, and with a strong current trading statement alongside the deal, that’s a stingy reaction.”

In line with the bullish commentary, the broker hiked its price target to 2,100p (from 1,950p) as it moved to a ‘buy’ recommendation (from ‘hold’).

WH Smith shares were up another 6.7% in late-morning trade on Wednesday to 1,940p.

Quick facts: WH Smith PLC

Price: £20.18

Market: LSE
Market Cap: £2.18 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: CB2 Insights licenses electronic data capture software to UK...

CB2 Insights (CSE:CBII-OTCQB: CBIIF) CEO Prad Sekar joined Steve Darling from Proactive Vancouver to discuss the company doing a deal with MYACCESS Clinics. This will allow CB2’s software to capture comprehensive data sets related to patient health and treatment histories and manage ongoing...

20 hours, 40 minutes ago

2 min read