LONDON (ShareCast) - (Sharecast News) - Canaccord Genuity has hiked its target price for travel company On The Beach by more than a half on the back of higher long-term growth potential.
Annual results from OTB earlier this month were in line with market expectations, though the group surprised to the upside with a £25m share buyback plan, new medium-term targets and a strong start to the new financial year.

Medium-term targets include a total transaction value of £2.5bn, up from £1.2bn last year, EBITDA margins of 40% (from 31.8%) and a pre-tax profit of £85m (from £31m).

"This suggests a marked acceleration in the growth based around total addressable market (TAM) expansion into City breaks," Canaccord said.

"We believe near-term growth is likely to be driven by cross-selling to the existing active customer base, with the initial impact of launch suggested being very positive, and this should help underpin short-term numbers before the company looks to start competing for new customers against much larger peers."

Canaccord cut its profit forecasts for next year slightly on the back of higher expected investment costs, but raised estimates for the year after. The broker reiterated a 'buy' rating on the stock, and raised its target price from 192p to 287p.

Shares were 0.2% higher at 236p, having surged by 38% since results were released on 3 December.

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