Broker comments in full24 Jun 2025 12:14
RBC estimates a 13% overall revenue CAGR from FY24 to FY27, with adjusted EBITDA growing 20% annually and adjusted EPS increasing at a 24% CAGR.
The company trades at 5.8 times FY26 estimated adjusted EBITDA, a 35% discount to peers, despite stronger EBITDA growth.
RBC assigns an 8 times multiple, resulting in a price target of 340p, compared to the current 263p share price.
RBC’s discounted cash flow model, using a 10.5% weighted average cost of capital and 2% terminal growth rate, yields a valuation of 325p.
According to RBC, OTB’s capital-light model offers a broad range of flight and hotel combinations from over 47 airlines and 23,000 hotels.
Approximately 70% of revenue comes from 500 hotels. Direct hotel contracting allows better pricing and customer service.
Free perks, including lounge access and security fast track, drive customer retention, with 55% of bookings from repeat customers.
OTB’s app contributes to customer loyalty, with higher rebook rates than desktop users. The app accounts for half of mobile bookings.
RBC sees further opportunity in personalization and loyalty initiatives to increase customer engagement.
International expansion remains a focus, with Ireland launched in 2024 and potential growth into Central Europe.
RBC notes limited tour operator competition and strong low-cost airline presence in target markets like Poland, Austria, and the Czech Republic.
B2B operations under Classic Collection Holidays aim to capture customers using high street agents. RBC forecasts B2B revenue to grow from £11 million in FY25 to £13.9 million in FY27.
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