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(Sharecast News) - RBC Capital Markets downgraded Cineworld to 'outperform' from 'top pick' on Wednesday, slashing the price target to 200p from 300p as it took a look at the leisure sector and how it might be affected by the coronavirus.
"The leisure sector relies on travel and social interaction and is vulnerable to any material spread of Covid-19," it said.
The bank switched its 'top pick' from Cineworld to Flutter Entertainment, which was lifted from 'outperform' with an unchanged price target of 11,000p. It upgraded InterContinental Hotels Group to 'sector perform' from 'underperform', with a 4,500p price target and maintained Domino's Pizza at 'outperform' with a 350p price target.
Restaurant Group's target price was cut to 120p from 170p but the rating was held at 'sector perform'.
On Cineworld, it said the Cineplex deal was initially greeted with a positive share price reaction but this was before Covid-19 struck and seemingly increased the risk exponentially.
"The market appetite for debt is very low - so even the 3.4x ND/EBITDA for 2020 seems high," RBC said. "An increase to 4.5x proforma and 4.0x including synergies post the deal now seems excessive given the new threat of Covid-19."
As for Flutter, RBC said that at sector level, the gambling companies should be less impacted by any coronavirus impact, noting that Flutter has 92% exposure to online categories.
RBC said that following the recent decline in the IHG share price, it has fallen significantly below the bank's price target and it using the opportunity to upgrade.
"The group has a low-risk business model for hotels based on franchise fees and is well financed and in excellent shape to survive the current downturn," it said.
RBC said Domino's will be one of the least-affected by the virus due to its delivery service.
"If consumers are concerned about going to public restaurants - a pizza delivery may prove an attractive option," it said.
Finally, it said Restaurant Group is in "a really tough position" given its exposure to the leisure restaurants, with a large number co-located next to cinemas and concessions.
"While pubs are more defensive - how consumers take to the more communal seating arrangements at Wagamama remains to be seen," it said.
24 Apr 2024 14:16
UK shareholder meetings calendar - next 7 days
| Thursday 25 April | |
| AFC Energy PLC | AGM |
| Admiral Group PLC | AGM |
| Beazley PLC | AGM |
| BP PLC | AGM |
| CLS Holdings PLC | AGM |
| CRH PLC | AGM |
| Dalata Hotel Group PLC | AGM |
| Develop North PLC | AGM |
| Drax Group PLC | AGM |
| Everest Global PLC | AGM |
| Greencoat Renewables PLC | AGM |
| Hammerson PLC | AGM |
| Helios Towers PLC | AGM |
| Hikma Pharmaceuticals PLC | AGM |
| International Biotechnology Trust PLC | AGM |
| London Stock Exchange Group PLC | AGM |
| Manx Financial Group PLC | AGM |
| Mattioli Woods PLC | GM re Pollen Street Capital Ltd takeover |
| Persimmon PLC | AGM |
| Premier Miton Global Renewables Trust PLC | AGM |
| Relx PLC | AGM |
| Schroders PLC | AGM |
| Smithson Investment Trust PLC | AGM |
| Tissue Regenix Group PLC | AGM |
| Weir Group PLC | AGM |
| Friday 26 April | |
| Bellevue Healthcare Trust PLC | AGM |
| Kingspan Group PLC | AGM |
| Me Group International PLC | AGM |
| Pearson PLC | AGM |
| Senior PLC | AGM |
| Smurfit Kappa Group PLC | AGM |
| Monday 29 April | |
| Goldstone Resources Ltd | AGM |
| Hydrogen Future Industries PLC | AGM |
| JPMorgan Claverhouse Investment Trust PLC | AGM |
| KR1 PLC | EGM re buying up to 15% of shares in issue |
| Ocado Group PLC | AGM |
| Secured Property Developments PLC | GM re name change to Mollyroe PLC |
| Symphony International Holdings Ltd | AGM |
| Tuesday 30 April | |
| Amigo Holdings PLC | GM re capital raise |
| Anglo American PLC | AGM |
| BBGI Global Infrastructure SA | AGM |
| CVC Income & Growth Ltd | AGM |
| Elementis PLC | AGM |
| Minoan Group PLC | AGM |
| Pebble Group PLC | AGM |
| Robert Walters PLC | AGM |
| Rotork PLC | AGM |
| Wednesday 1 May | |
| Alfa Financial Software Holdings PLC | AGM |
| Alpha Group International PLC | AGM |
| AVI Japan Opportunity Trust PLC | AGM |
| Domino's Pizza Group PLC | AGM |
| Electric Guitar PLC | GM re reverse takeover of 3radical |
| Flutter Entertainment PLC | AGM including vote on primary listing move to New York |
| Glanbia PLC | AGM |
| Jade Road Investments Ltd | AGM |
| Johnson Service Group PLC | AGM |
| Smith & Nephew PLC | AGM |
| Spirent Communications PLC | AGM |
| STV Group PLC | AGM |
| Tritax Big Box REIT PLC | AGM |
| Unilever PLC | AGM |
| Witan Investment Trust PLC | AGM |
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