On the Beach Group (LSE:OTB) shares have become “unjustifiably cheap” after a sharp sell-off driven by geopolitical turmoil and weaker consumer confidence, according to RBC Capital Markets.
An 'outperform' rating on the online travel company was reiterated, though the price target was trimmed to 290p from 305p after downgrading profit forecasts for the next two years, though analysts said the recent slump in the shares did not reflect the company’s longer-term prospects.
On the Beach had been hit by an industry-wide slowdown in bookings after the outbreak of the Iran conflict in March, which weighed on demand for holidays in the eastern Mediterranean.
The company had previously warned about a later booking cycle as consumers delayed travel purchases amid economic uncertainty. This was "circumstances out of the group's control, driving temporary pressure", the RBC analysts said.
However, an update last week revealed trading momentum had begun to recover, with booking volumes rising 9% over the past six weeks after growing about 10% before the conflict began.
City break holidays were a standout area, with bookings up 116% year on year in the first half, while Irish bookings rose 74%.
Analysts also pointed to the group’s expansion into cruises as a significant long-term opportunity, arguing the fragmented market remained dominated by smaller operators using outdated technology.
"The group is controlling the controllables well, momentum appears to be turning," they wrote in a note to clients.
The company’s medium-term targets is seen as remaining achievable, although likely to take longer than previously expected because of the difficult macroeconomic backdrop.
The update to estimates takes a more cautious view in both 2026 and 2027 financial years, before a "more bullish approach to recovery" the year after.