Berenberg reiterates 'buy' rating on WH Smith
Analysts at Berenberg reiterated their 'buy' rating and 1,600.0p target price on retailer on Monday as it said the group's potential high street exit looked "sensible".
Berenberg said WH Smith was "well positioned" to benefit from structural growth trends in the global travel concession market, in its view, noting that airport passenger volume growth, as well as continued product category expansion and higher average transaction values, should be "supportive". It also reckons that the opportunity for further tender wins, particularly in North America, also remains "vast".
"On 25 January, press reports stated that WH Smith was exploring a potential sale of its UK high street business as part of a strategic review," noted the German bank. "Given the structural decline of the division, we view this move as positive - removing an overhang from the investment case and potentially driving a re-rating of the earnings multiple."
Berenberg said its analysis implied the division could be worth £120.0m-190.0m and stated that with this cash available to WH Smith, it could then further invest into its higher-growth travel division.
Reporting by Iain Gilbert at Sharecast.com
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