In a note to clients, the City broker’s analysts said that the hostel operator is well-placed to navigate a prolonged dip in travel as it started the coronavirus crisis with €20mln in the bank, no debt and a monthly cash burn of below €2mln.
READ: Hostelworld falls out of bed as it warns coronavirus could wipe €4mln off first quarter earnings
“We are a little optimistic that, while hostel occupancy will be down post-COVID-19, pricing may be up as travellers prioritise destinations with developed healthcare and pay up for social distancing,” the analysts commented.
“However, the main risk, apart from weak demand, comes from Hostelworld‘s competition, which have deeper pockets to pay for marketing,” they added.
The analysts said they have left their 75p target price for Hostelworld unchanged following an 84% plunge from a 52-week high, making the company among the worst recent performers in Peel Hunt’s coverage.
Shares rose 6% to 73.4p on Tuesday morning.
Published at Tue, 28 Apr 2020 09:48:00 +0000-Hostelworld upgraded to ‘hold’ by Peel Hunt amid cautious post-coronavirus crisis optimism