JP Morgan toasts European leisure sector
JP Morgan has adopted a positive position on European hotel and gaming stocks, including upgrading France's Accor and reiterating its 'overweight' rating on Marston's.
In a note discussing the 2025 outlook for the European leisure sector, published on Friday, the Wall Street firm said it was "relatively" more positive on hotels.
"We turn more optimistic as travel remains a top non-essential spending choice across consumers, with Trump's win, along with a strong dollar, likely to boost American tourism to Europe," it argued.
As a result, it upgraded France's Accor to 'overweight' and reiterated is 'overweight' rating on Whitbread, the owner of Premier Inn. JP Morgan said Whitbread's rating reflected the group's "new framework of enhanced returns and buybacks".
IHG Hotels & Resorts - rated 'underweight' - was its least preferred hotel stock "due to ambitious guidance, high expectations and valuation".
In gaming, JP Morgan's preferred sub-sector due to "appealing fundamentals, supportive momentum and relatively easy first half comparatives", its highest 'overweight' conviction was Flutter Entertainment.
In catering, however, JP Morgan said it was taking a more selective approach after a solid performance in 2024.
It said: "We value the industry's strong fundamentals, but remain selective, focusing on quality and contract wins - 'overweight' Compass versus 'neutral' Sodexo.
"We also upgrade Elior to 'overweight', seeing it as an attractive recovery play."
It removed Compass from is analyst focus list "after a solid run".
Finally, within UK pubs, the bank said Marston's remained its top pick due to its "wet-led, value-end, suburban exposure, self-help initiatives, ongoing de-leveraging and attractive valuation". JP Morgan is 'overweight' on the FTSE 250 operator.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.