Deutsche Bank upgrades Compass Group to 'buy'

(Sharecast News) - Deutsche Bank upgraded caterer Compass Group on Thursday to 'buy' from 'hold' as it took a look at the hotel and leisure sector. The bank said that since the beginning of the year, the Stoxx Travel & Leisure has underperformed the Stoxx 600, down 1.9% versus 8.4% higher, respectively.

DB said its 14 large-cap stocks covered are down 2.9%.

"The T&L sector has historically been a multiple of GDP growth," it said. "We believe groups exposed to the Leisure clientele should remain well-oriented (tour operators and Melia essentially)."

The bank also said it continues to play "resilient" and "value" stocks.

In addition to traditional buy/hold/sell recommendations, DB classified its stocks under three categories: top picks, "other" buy, and hold.

The bank said its top picks are Compass, for which it has lifted the price target to 2,900 from 2,700p and Premier Inn owner Whitbread, which it rates as a 'buy' with a 3,750p price target.

DB said it has seven 'buy' recommendations with slightly more risky profiles, lower liquidity and/or fewer short-term catalysts, most of which offer attractive valuations.

It rates Edenred at 'buy' and cut the price target to €45m from €49. It rates Elior at 'buy' with €4.0 price target.

The bank lifted its price target on 'buy' rated Melia to €9.5 from €9.0, but cut its price target on 'buy' rated Pluxee to €33 from €34.

It rates Tui, Jet2 and OTB at 'buy', with price targets of €11, 2,059p and 320p, respectively.

Deutsche has five 'hold' recommendations: Accor, InterContinental Hotels, Scandic, Sodexo and Dalata.

It has a €49 price target on Accor, lifted its PT on IHG to 8,050p from 7,900p and on Scandic to SEK79 from SEK75. The price target for Sodexo was cut to €63 from €69.

At 1435 BST, Compass shares were up 2% at 2,589.87p.