Broker tips: Whitbread, Convatec
By Digital Look
Date: Thursday 21 Aug 2025
(Sharecast News) - Citi lifted its price target on Whitbread on Thursday to 3,800p from 3,600p as it reiterated its 'buy' rating, saying it sees a "compelling investment case" after the 29% share price increase since April.
"Balance sheet strength enables growth beyond the UK market as our UK project tracker shows circa 30% of Premier Inn's pipeline is office-to-hotel conversions, while in Germany we are encouraged by a Q2 hotel development pipeline inflection," the bank said.
"With current RevPAR growth not significantly skewed by concert calendars or weather, and inbound-outbound travel now broadly normalised supports a recovery over time towards c.+2% RevPAR driven by economic factors and supported by our expectation of c.0.5% UK market supply growth."
Citi said the stock's valuation is undemanding versus its own history and the UK market and the underlying investment case driving 10% earnings per share growth compelling.
RBC Capital Markets upgraded Convatec on Thursday to 'outperform' from 'sector perform' as it said the recent share price reaction was likely overdone and the current price is a buying opportunity ahead of solid underlying top line growth and mid-term margin development.
The bank noted the shares are down 20% since June peaks, reflecting news flow around the proposed reimbursement changes in the US.
"The shares now trade on 16.5x 2026E P/ E, towards the lower end of the 5-year range and below the 3-year average valuation premium to the peer group," it said.
"We adjust our forecasts for H1 results and our updated view on 2026 and 2027, as well as the recently announced $300m share buy-back programme, roll forwards our valuation and move our price target to 315p (from 320p)," it said.
"With risk-reward skewed clearly to the upside, further clarity on these reimbursement changes could prove a positive catalyst (expected Q4 2025)."
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