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SSP (SSPG) 342p
Gain to date: 5.9%
Original entry point: Buy at 323p, 13 October 2016
There are mixed views on SSP (SSPG) among analysts, although we maintain our bullish stance on the transport hubs food seller.
Canaccord Genuity has upgraded its earnings forecasts for SSP for the next three years as result of beneficial foreign exchange rates and contribution from a new Indian joint venture.
The investment bank’s earnings per share estimates have been lifted by 5% to 14.6p for the year to September 2016 (figures to be reported on 29 November). It lifts estimates by 8.4% to 16.8p for the 2017 financial year; and pushes up 2018 numbers by 10.4% to 19.1p.
SSP earns 58% of its earnings before interest and tax outside of the UK. This international exposure is very attractive to anyone interested in mid-caps as the FTSE 250 has historically been heavily populated by UK-focused businesses.
UBS has a ‘sell’ rating on SSP, saying its valuation is too rich. It notes a significant reduction in UK air passenger growth forecasts – that matters because airports are a source of earnings for the group. (DC)
We believe it warrants a premium rating because of its large scale and captive audience. If you’re stuck waiting for a plane or train, you’re going to buy its food and drinks as there may not be time or opportunity to find cheaper alternatives.
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