Davy eyes 50% jump in Dalata share price

Broker sees big potential in UK market for Dublin-listed hotel group

A  Dalata  agm. Davy Stockbrokers has  given the Dublin-listed company an “outperform” rating.  Photograph: Dave Meehan

A Dalata agm. Davy Stockbrokers has given the Dublin-listed company an “outperform” rating. Photograph: Dave Meehan

 

Shares in hotel group Dalata could rise by as much as 50 per cent in the medium-term if the group takes advantage of opportunities in the UK market, Davy Stockbrokers has said.

The broker has given the Dublin-listed company an “outperform” rating, and a 12-month price target of €6.20 (an increase of 23 per cent). However, it believes that the stock has a potential medium-term upside of 50 per cent given the potential in the regional UK market.

“Our on-the-ground research in several UK cities points to a stock of dated and under-invested three-star and four-star hotels. This is the opportunity for Dalata, which now plans to add circa 7,000 rooms in the UK – almost double its current room count,” the broker said.

Citing Dalata’s decentralised operating model as “a key differentiator” for the group in winning market share from peers, Davy said that the next phase of the Dalata equity story “looks compelling”.

This month Dalata said it had agreed a deal with a German real estate group, Deka Immobilien, for the sale and leaseback of the Hotel La Tour in Birmingham for €33 million. The group also recently disclosed that it is set to redevelop the Tara Towers Hotel in south Dublin into a mixed-use development, incorporating a 140-bed Maldron Hotel plus 70 apartments.