Berenberg raises Whitbread target price, stays at 'hold' amid leverage concerns

(Sharecast News) - Analysts at Berenberg lifted their target price on Whitbread to 2,700p from 2,400p following measures announced in the 2026 UK Budget, although they retained a 'hold' rating as they continues to seek further evidence that the Premier Inn owner's turnaround strategy has gained traction. Berenberg said changes to business rates represented a meaningful positive for Whitbread after several years of rising cost pressures, with preliminary estimates suggesting business rates will increase by between £7.5m and £12.5m in FY28, significantly below previous market expectations of around £35m, prompting the bank to raise its FY28 and FY29 pre-tax profit forecasts by 4% and 6%, respectively.

While the analysts highlighted encouraging progress in the first half, including five consecutive quarters of UK revenue per available room growth, they warned that leverage remains elevated and that Whitbread was still reliant on property disposals to help fund its long-term growth plans.

Berenberg noted that proceeds from asset sales have so far lagged expectations, with Whitbread needing at least £425m of disposal proceeds to meet its FY26 target. Failure to achieve that could leave leverage above the group's preferred threshold.

The German bank said the Budget provided additional breathing room for management to execute its five-year strategy, but also highlighted that continued cost inflation and a back-end-loaded earnings recovery meant it was not yet ready to turn more positive on the shares.





Reporting by Iain Gilbert at Sharecast.com