Whitbread PLC (LSE:WTB) is well placed for the coming financial year, with the worst of the COVID-19 pandemic set to be over by then, according to broker Peel Hunt, which reiterated its ‘buy’ rating and 3,600p target price on the hotel and restaurant group.
“We believe that the recovery will quickly re-establish itself from early in Whitbread’s new financial year”, which starts in March, the broker said in a note.
“Whitbread’s share price has lagged peers since last summer and we expect it to catch up, or for the value of this freehold-backed business to attract a bidder,” it added.
The broker noted that England appears to be resisting imposing further pandemic restrictions and that the Omicron variant of coronavirus seems to be working its way through the population very quickly, which all bodes well for Whitbread.
The group’s Premier Inn hotel business has been impacted by rising costs, particularly labour costs, and although these pressures are set to continue in the new financial year, Premier Inn “will benefit from market leadership, a well-invested estate and a business in Germany that will emerge from COVID-19 materially larger than when it went in”, the broker said.
Last summer, Premier Inn benefitted strongly from the boom in staycation holidays. Peel Hunt said summer 2022 may not be as strong as last year for the hotel group as people head for holidays abroad.
It also said the recovery in international travel may take longer than the domestic recovery.
Whitbread shares were 0.7% lower at 3,147p in late morning trade.