JPM prefers catering over hotels & gaming in 2024

Elior SA

14/12/2023 12:20

** J.P.Morgan turns more constructive on catering while
remaining more selective on hotels & gaming within European
leisure for 2024
    ** It sees catering well positioned, offering above-average
revenue growth, sound earnings visibility, and solid free cash
flow that it says should lead to incremental buy-backs or
bolt-on M&A
    ** JPM expects low single digit percentage revenue per
available room (RevPAR) growth year-on-year for hotels, and
struggles to see what could drive the shares higher in the
absence of positive earnings revisions
    ** The broker notes limited visibility ahead for gaming, and
a lack of near-term positive catalyst, with Italy and Greece
offering more encouraging prospects
    ** It upgrades Compass  CPG.L  to "overweight" from
"neutral" seeing the world's largest catering firm the most
defensive name within leisure as two thirds of its revenue
splits in healthcare, education & sports & leisure, making it
relatively immune to a recession/macro slowdown
    ** It raises Elior  ELIOR.PA  to "neutral" from
"underweight", saying that appointment of Daniel Derichebourg as
CEO alongside acquisition of DMS could provide some answers on
path to margin recovery, but adds that there is still too much
uncertainty 
    ** The brokerage upgrades Marston's  MARS.L  to "overweight"
from "neutral" seeing the British pub operator's equity story as
appealing given expectations of progressive margin improvement,
and ongoing business simplification, among others



 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))