Broker tips: Whitbread, Hostelworld

(Sharecast News) - Analysts at Berenberg lowered their target price on Premier Inn owner Whitbread from 3,900.0p to 3,500.0p on Thursday as it noted that UK hotel demand has "remained anaemic" year-to-date. Berenberg now forecasts negative revenue per available room growth in FY26 as a result of weak demand but noted that despite this, it was encouraged by the company's outperformance versus the wider market, the ongoing inflexion in Germany and its previously announced property valuation, which it thinks could be a "positive catalyst".

The German bank, which reiterated its 'buy' rating on the stock, noted that in its most recent set of results, Whitbread reiterated that its five-year plan remained on track to deliver incremental profit of at least £300.0m by FY30, while also generating more than £2.0bn in shareholder returns.

Berenberg also highlighted that since the plan was announced in October 2024, the UK market has continued to soften and cost inflation has risen as a result of changes to UK National Insurance costs. However, Whitbread has also expressed confidence in its cost-saving plans, which could help to offset this.

"That being said, both we and consensus forecast lower incremental profit. By FY30, we forecast an incremental £220.0m of PBT on what was delivered in FY25. However, this number is very sensitive to RevPAR and accommodation sales, with a 1% growth shift worth £16m-£17m of PBT in FY26. Therefore, if RevPAR growth outperforms our estimate, we would gain more confidence that its target for £300m of incremental profit by FY30 is achievable," said Berenberg.

Shore Capital reiterated its 'buy' rating and 142.0p target price on Hostelworld on Thursday following the group's H1 trading update.

Shore Capital noted that net revenue of €46.7m was flat year-on-year, with net bookings also flat at 3.7m, reflecting previously flagged headwinds of geographic mix, USD weakness and softness in European bed pricing, and compares with full year assumptions of "mid-single digit" revenue growth.

The broker stated that encouragingly, trading in June was said to have strengthened with both volume and ABV growth across all regions, including strong demand for intra-European travel.

"We are encouraged by commentary on strategic initiatives, notably the rollout of Elevate, its new marketplace monitisation tool, with H1 commission rates up 60bps to 15.8% in H1, despite only being launched in June," said the analysts.

Furthermore, Shore Capital noted that mobile app bookings grew 11% in H1 and the global marketplace for Trip Plans was also said to be gaining traction, helping to increase the proportion of booking from social members, rising a further 5% from last H1 to 85%.

"We believe that all this bodes well for the second half, with full year assumptions implying high-single digit net revenue growth in H2, and over the medium term," said Shore Capital.