Berenberg cuts SSP target to 225p after fourth-quarter results

what happened

ShareCast reported that Berenberg viewed SSP’s fourth-quarter performance, covering the period to September, as solid at the top line. Like-for-like growth reached 4%, in line with consensus, with the UK again leading the result. Better optimisation of the North American joint-venture structure and a reduced tax charge supported FY26 EPS in line with expectations. Berenberg said this extended the company’s EPS compound annual growth rate since FY24 to 18%.

However, unfavourable US passenger trends during the crucial summer season left the region below SSP’s internal forecasts and resulted in FY26 EBIT coming in 4% under consensus. Asia-Pacific, Eastern Europe and the Middle East improved, led by the Gulf, although the Middle East conflict continued to affect Asia-Pacific and India. Continental Europe also recorded solid trading.

The broker reduced its FY26 underlying earnings estimate by 5%, with the change carried into FY27 and FY28. FY26 free cash flow of about £70m was below previous guidance of more than £100m, despite underlying cash generation rising to £140m–£150m. SSP attributed the gap to not using additional supply-chain financing, quicker European restructuring and weakness in North America. Berenberg’s sum-of-the-parts valuation produced a new 225p target; SSP’s core business trades at 8x FY27 earnings, around a 25% discount to peers.

why it matters

The update combines lower earnings and cash-flow estimates with a valuation discount that Berenberg considers unjustified. For markets, the key tension is between high-teens EPS growth and weaker US operations, restructuring costs and cash conversion.

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