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Investing.com - Morgan Stanley downgraded Scandic Hotels Group AB (SHOT:SS) from Equalweight to Underweight and lowered its price target to SEK85.00 from SEK90.00.
The downgrade follows Scandic’s recent completion of a €500 million acquisition of Dalata’s hotel operation, which Morgan Stanley initially viewed as boosting earnings per share by nearly 20%.
While the deal is structured as a management fee initially, Scandic will assume all operations and new lease obligations after the carve-out expected in the second half of 2026, exposing the company to increased costs.
Morgan Stanley cited the recent UK budget as a significant concern, as 22 of the 56 acquired hotels are located in the UK, where a 4% increase in the national minimum wage and an estimated average 74% rise in rateable values will impact profitability.
The investment bank estimates these changes will add approximately €10 million (SEK110 million) to Dalata’s UK rates bill, representing a mid-teens hit to EBITDA on a post-carve-out basis, leading Morgan Stanley to reduce its FY27/FY28 EPS forecasts by 6% and 8% respectively.
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