Despite the market continuing to drift lower Whitbread has recovered some ground from its recent falls.
A trading update last week showed signs of a slowdown in its two main businesses, Costa Coffee and Premier Inns, but analysts at Jefferies believe the decline in its shares may have gone too far.
Jefferies moved its recommendation from underperform to hold, although it slashed its price target from £41 to £36. The company’s shares are currently 65p higher at £37.66.
Analyst Ian Rennardson said:
With evidence of slower growth in Whitbread’s two main businesses we lower our earnings per share forecasts by 5-7% and our price target falls to 3600p, close to the current share price. We move to a hold following a near 35% fall in the share price, which we now believe may not fully reflect the potential spin-off of Costa Coffee.
