Newspaper article The Evening Standard (London, England)

Citigroup Puts Holiday Cheer into Whitbread

Newspaper article The Evening Standard (London, England)

Citigroup Puts Holiday Cheer into Whitbread

Article excerpt


WHITBREAD'S cut-price hotels could be a safe place for investors to restduring a recession. That's the theory being pushed by analysts at Citigroup,who are betting the group will benefit from lower holiday budgets.

"People have not tended to sacrifice holidays entirely, instead looking to savemoney on cheaper accommodation," says Citigroup. About 70% of Whitbread profitscome from Premier Inn and only 20% from its pubs/ restaurants business nowconsisting of Beefeater and Brewers Fayre.

Budget hotels have proved resilient in previous downturns and Citi says therecent fall in Whitbreaddown 181p since the beginning of the yearhas been excessive. It is upping the group to buy from hold but sticking withits 1400p target. With the bank holiday weekend just around the corner, Citi'sreasoning hit home and Whitbread was 30p higher at 1249p.

In fact, a holiday spirit lifted the whole market and the FTSE 100 rose 62.8 to6150.1, encouraged by Wall Street's robust performance and strong trading onmost major Asian stock markets.

Royal Bank of Scotland, 12p higher at 358p was in focus, with many buying intotoday's story of a possible [pounds sterling]8 billion bid from Texas Pacific for the insurancearm. Other lenders got a lift, with Alliance & Leicester up 13 1/2 p at 524pand Lloyds TSB 11 1/4 p better at 442p.

Canny investors are looking at London-based testing and inspection groupIntertek, 43p higher at 1005p, with fresh eyes. The shares are some way off theyear high of 1050p, unfairly punished by investors who are worried about thecyclical nature of the business.

However, analysts at Goldman Sachs point out Intertek now has a better mix ofservices which makes it less volatile and can only benefit from increased focuson safety, particularly in the US where third-party toy testing is nowmandatory. …

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