Broker tips: Synthomer, Whitbread

(Sharecast News) - Analysts at Berenberg hiked their target price on chemicals business Synthomer from 60p to 100p on Wednesday as it said the firm had received "some big, although temporary support" from Iran-linked raw material shortages at Asian peers. Berenberg noted that Synthomer's shares had risen by 37% from their multi-year lows at the start of 2026, and noted that the rally was "broadly fair", in its view.

The German bank said the high amount of debt relative to equity meant that the share price was "very sensitive even to small changes" in Synthomer's earnings outlook. It also noted that the worst-case scenario − which would entail a covenant breach and debt-for-equity swap − has been averted by the renegotiation of covenants on 30 April.

"The recent improvements in EBITDA outlook for 2026 are not small, even if they are temporary in nature. Feedstock shortages of butadiene in Asia and other chemicals sourced from the Middle East have pushed up prices for nitrile latex and acrylics," said Berenberg, which reiterated its 'hold' rating on the stock.

"The circa £60m/30m/11m increases to our 2026/27/28 EBITDA estimates primarily reflect higher margins in nitrile latex and acrylate monomers; this is partly offset in outer years by higher assumed interest costs. Shares trade on circa 4x EV/EBITDA, at the lower end of diversified chemicals (these typically range from 4-10x)."

Deutsche Bank lowered its target price on hospitality group Whitbread from 2,815p to 2,530p on Wednesday as it attempted to "distill the impressively detailed" capital markets day into analysing the targeted £165m pre-tax profit uplift and the firm's revenue/cost guidance.

Deutsche bank stated that strategically, Whitbread's commitment to "an investment-grade b/s meant" that trading as an operating company/property company was ruled out, but also noted that the board of the Premier Inn owner "remains convinced" of the logic of continuing to invest in Germany.

"This brings the investment case back to RevPAR and returns in our view. In short, WTB will add c.10k net new rooms in the UK (expanding the estate by 11%) and 6.5k (55%) in Germany. Part funding the former with non-core pub disposals and reaching maturity in Germany would give a c.500bp ROCE boost," said DB, which kept its 'hold' rating on the stock.

"At the group level, the targeted £165m uplift is a 6% CAGR in PBT. Additionally, WTB aims to generate £2bn in shareholder returns, of which we estimate £160m will fund annual dividends, amounting to a 4% yield at the current share price and the residual could amount to £240m pa (6%) in share buybacks."

Reporting by Iain Gilbert at Sharecast.com