Whitbread PLC (LON:WTB) has been upgraded by analysts at Citigroup as they see COVID-19 as presenting “a significant market share opportunity” against its branded rivals and smaller independent hotels.
Following the positive vaccine news at the start of the week, Citi upped its hotel targets to reflect the greater probability of “normalized” earnings in 2022.
Forecasts for the sector already reflected 2021 being a “transition year of progressive recovery”, which depended on successful treatments and vaccines being progressively rolled out, so new estimate changes only reflect recent data and company reporting.
Premier Inn operator Whitbread was upgraded to ‘buy’ from ‘neutral’ and its share price target yanked up to 3,400p from 2,350p, with the analysts noting the potential long-term structural impact from corporate travel being “disintermediated by virtual meetings and events”.
“We believe COVID-19 presents a significant market share opportunity versus largest branded competitors and independent hoteliers in the UK,” they added, expecting 2021 revenue per available room (RevPAR) to decline 56% and then 16% and 9% in 2022 and 2023 compared to 2020.