LONDON (ShareCast) - (Sharecast News) - Liberum has kicked-off coverage of On The Beach at a 'buy', setting a 560p target price for the online travel operator's shares in the process.
Its analysts hailed the company's "disruptive" proprietary technology, projecting that the resulting market share gains would drive the compound annual rate of growth in EBITDA and EPS over the next three years to 16.4% and 15.7%, respectively.

But the company's equity story didn't end there, with "new products and new markets giving a long runway for the future," they said.

"The market is undervaluing OTB's long term potential and not recognising the option value from international expansion, long-haul product growth, and the diversification into offline/b2b," they added.

Related to the latter, they highlighted the recent launch of its Classic Package Holidays portal, which they believed would appeal to independent travel agents.

According to Liberum, the offline package holiday market was worth roughly £7.0bn a year and the company's long-haul products were expected to grow rapidly, with international markets set to make positive contributions from fiscal year 2022 onwards.

"Proof that the model can be replicated overseas should unlock future options," they added.

On the Beach's technology was also allowing it to drive down customer acquisition costs while "other product lines and direct contracting add both content and further margin upside."

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