Proactive Investors - Run By Investors For Investors

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.

View full SMWH profile View Profile

WH Smith PLC Timeline

October 11 2018
August 30 2018

Related Articles

May 21 2019
H&T investing in digital offeringProfits gain in 2018Outlook upbeat as strategy pays off
medical imaging graphic
June 13 2019
Here we take a closer look at the imaging and diagnostics firm IQ-AI
May 23 2019
Company is looking for more acquisitions after integration of Metro Rod

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use