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Whitbread: Berenberg maintains 'buy'

(CercleFinance.com) - Berenberg maintains its "buy" rating on British hotel and coffee shop operator Whitbread, with a target price of 4,900 pence, saying that the Costa chain is being "underappreciated" by the market.

"We continue to believe that Whitbread is an attractive growth story that is being affected by two significant headwinds - weak like-for-like growth at Costa and the uncertainty about Brexit," the German broker says.

However, Berenberg remains convinced that in the case of Costa, the ongoing structural growth is better than the company is being credited for.

In particular the broker considers the Costa Express coffee machine as a "hidden gem."

"We continue to believe that the impact of Costa Express is being underappreciated," it writes in a research report.

"With a machine becoming economical selling as few as 30 cups a day, we believe the growth potential both in the UK and overseas is enormous," Berenberg says.

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