Broker tips: On The Beach, Bytes Technology

(Sharecast News) - Canaccord Genuity cut its target price on online package holiday business On the Beach from 293p to 240p on Wednesday after the firm announced its interim results for the six months ended 31 March, which saw a broad impact from the ongoing conflict in the Middle East. Canaccord Genuity noted that while H1 booking volumes were "positive and ahead of the market", revenues were down 12% year-on-year, with operational deleveraging resulting in adjusted underlying earnings and adjusted pre-tax profits declining by 50% and 72%, respectively.

The Canadian bank also said On the Beach's outlook "did show some signs of stabilisation", with bookings growth into H2, and noted that it had reinstated FY guidance, expecting to deliver pre-tax profits in the range of £18 to £25m.

"We have rebased our estimates to below the mid-point of this range for FY26. There are some reasons for caution given the overall lack of visibility around travel trends and their potential to impact any H2 recovery, but we also note strong progress on OTB's medium‑term targets," said Canaccord Genuity, which has a 'buy' rating on the stock.

Canaccord added that On the Beach's shares had declined roughly 25% since 1 March, through a combination of both estimate revision and de-rating, and that it now trades at 7.3x FY27 earnings per share estimate.

Analysts at Berenberg lowered their target price on software and services firm Bytes Technology from 390p to 360p on Wednesday following the group's in-line FY26 results a day earlier.

Berenberg highlighted that Bytes had delivered headline financial metrics that were as expected by the market and had retained its FY27 guidance for high-single-digit/low-double-digit gross profit growth and flat year-on-year operating profits.

Entering 2027, Berenberg noted that Bytes has moved past the year-on-year impact of Microsoft's changes to its partner incentives, with first half comparatives "much less challenging" than those faced in H226.

However, Berenberg also noted that there were "a number of significant changes to the company's operations" that its thinks need "further time to bed in".

"We increase our gross profit forecasts by 2%, 2% and 3% in FY27, FY28 and FY29 respectively, and lower our reported operating profit forecasts by 7% in each of FY27, FY28 and FY29," said the German bank, which reiterated its 'hold' rating on the stock.

Berenberg added that Bytes currently trades on 15.7x FY27 price-to-earnings ratio and a 7.6% FY27 FCFF yield.