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Investing.com - Bernstein SocGen Group downgraded Whitbread PLC (LON:WTB) from Outperform to Underperform on Friday, slashing its price target to GBP25.00 from GBP36.00 following significant UK property tax increases.
The downgrade comes after the UK government released updated rateable values on England properties alongside its budget, with Whitbread’s properties facing approximately 170% increases. Many of the company’s properties will exceed the £500,000 hospitality relief limit, requiring full tax payments.
Some locations face even steeper increases, with the Manchester Piccadilly Premier Inn set for a 385% jump in rateable value. Bernstein estimates this will create a £25-30 million impact in the first year, £80-90 million in the second year, and approximately £130-140 million in the third year.
While the company can appeal the new rateable values, Bernstein notes this process cannot begin until April 2026, likely forcing Whitbread to provide guidance reflecting the full impact in January 2026.
The firm has reduced its 2027/28 earnings per share forecast by 15%, describing the tax changes as "a hammer blow given the recent inflection in trading."
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