Berenberg reiterates 'buy' rating on Dalata following 'strong' interims
By Iain Gilbert
Date: Tuesday 03 Sep 2019
(Sharecast News) - Analysts at Berenberg reiterated their 'buy' rating on hotel operator Dalata Hotel Group on Tuesday, praising the group for its "strong performance" under "tough conditions".
After Dalata announced a healthy set of interim results, with double-digit growth in both revenue and underlying earnings, despite its core markets being weak, Berenberg said the firm's performance demonstrated the benefits of the company's differentiated business model and diverse customer mix.
Although Dalata's like-for-like revenue per available room was down 0.5% in Dublin and increased by just 0.3% in regional Ireland, the German broker noted that those figures were still better than those for the sector as a whole, as the Dublin market declined 1.4%, while RevPAR in Cork and Galway "dropped considerably".
And while trading in those markets had remained subdued during July and August, which Berenberg noted would have an impact on Dalata's trading since the half-year ended, the outlook for the balance of the year was "positive", leading its analysts to anticipate a full-year performance similar to that of the first half.
"As such, we remain confident in Dalata's medium-term expansion plans and believe its growth potential is being significantly underappreciated at the current share price," added Berenberg, which also stood by its 700p target price for the group's shares.
Berenberg also pointed to Dalata's strong balance sheet and significant medium-term expansion plans as reasons to remain positive on the group.
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