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July 7, 2020, 8:42 a.m. EDT

Whitbread slumps as broader FTSE 100 eases

By Steve Goldstein, MarketWatch

Hotel operator Whitbread struggled on Tuesday, as the broader U.K. blue-chip index failed to extend the previous day’s strong advance.

Whitbread (LON:UK:WTB)  shares fell over 4% as the operator of the Premier Inn chain reported a 79% drop in fiscal first-quarter ending May 28 revenue.

Whitbread said it is seeing “good demand” for the summer months in traditional regional tourist destinations, but the rest of the regions and metropolitan areas, including London, remain subdued.

Analysts at Bank of America kept an underperform rating on the stock, which has slumped 44% this year.

“While Whitbread’s high exposure to domestic customers is likely to help, the group has an asset-heavy model, suggesting a relatively high degree of operational leverage, unfavorable in our opinion given uncertainties on the pace of the recovery,” the bank said.

After Monday’s 2.1% rally on hopes for China’s recovery, the FTSE 100 (FTSE:UK:UKX)  slipped 1.6% as concerns about coronavirus re-emerged.

Betting operator GVC Holdings (LON:UK:GVC)  was one of the few advancers, helped by Deutsche Bank lifting its price target ahead of its update due on July 16. Deutsche Bank expects double-digit organic growth from its online gaming unit, helping to limit the overall first-half revenue to 12%.

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