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Nov 5 2018, 06:45 GMT
Dalata’s share price has fallen by 20% since early October. Concerns about oncoming Dublin supply and VAT changes are overdone. We estimate the stock is now pricing in a circa 4.5% underlying RevPAR decline in Dublin in 2019. We view this as an overly conservative scenario – we expect underlying Dublin RevPAR growth for Dalata to reach 3%. Further, we note that expected EBITDA growth in 2019 is strongly underpinned by new room additions. Coupled with an expanding UK pipeline, Dalata offers superior growth prospects at a peer average EV/EBITDA multiple. In this context, we believe the recent sell-off is overdone and reiterate our ‘Outperform’ rating and €7.00 price target.