SSPG: Raised Earnings Outlook And Buyback Plan Will Support Upside

We trim our fair value estimate for SSP Group to £3.10 from £3.30 per share, reflecting analysts' reduced price targets following a more cautious view on margins and required returns, partly offset by still resilient revenue growth expectations and a higher assumed future P E multiple.

Analyst Commentary

Recent Street research remains constructive on SSP Group, even as some targets are recalibrated to reflect a more measured view on margins and the cost of capital. Bullish analysts continue to highlight the company’s resilient top line trajectory and scope for operational improvement as key supports for upside from current levels.

Despite modest reductions in stated price objectives, the maintenance of positive recommendations signals confidence that SSP can successfully execute on its growth pipeline and margin initiatives. The spread in targets also underlines differing views on the pace of recovery and long term earnings power, but the overall tone of research remains skewed toward a favorable risk reward profile.

Bullish Takeaways

• Bullish analysts continue to assign valuation multiples that are above the market average, pointing to SSP Group’s exposure to structurally growing travel volumes and its strong positioning across key transport hubs.
• The reaffirmation of positive ratings, even alongside slightly lower price targets, indicates that near term cost pressures are seen as manageable within the broader investment case, with medium term earnings growth expected to support higher equity values.
• Resilient like for like revenue trends and an expanding international footprint are viewed as important growth catalysts, supporting the view that SSP can deliver compounding cash flow and justify a premium to historical valuation ranges.
• Research commentary suggests that improving operational efficiency and continued recovery in passenger traffic could drive upside to current margin assumptions, offering potential for estimate upgrades and further price target support over time.

What's in the News

• SSP Group raised its 2026 earnings guidance and now expects earnings per share toward the upper end of the previously indicated 12.9 to 13.9 pence range, reinforcing confidence in medium term profit growth.
• The Board authorized a new share buyback plan and entered into an arrangement with Barclays to repurchase up to £100 million of stock by October 9, 2026, with all repurchased shares to be cancelled, signaling a focus on capital returns.
• Activist investor Irenic Capital is promoting a potential take private of SSP Group at a suggested 50 percent premium. The investor highlights the company’s predictable revenues, growth potential in US airports, and scope to unlock value via non core asset sales, while also pointing to margin underperformance versus pre pandemic levels.
• SSP confirmed earnings guidance for 2025 and 2026, with 2025 constant currency revenue expected at about £3.7 billion and operating profit of approximately £230 million, implying a margin of roughly 6.2 percent and earnings per share around the middle of its prior range.

Valuation Changes

• Fair Value Estimate reduced slightly to £3.10 per share from £3.30, reflecting a modestly more cautious outlook.
• Discount Rate increased marginally to 13.19 percent from 12.94 percent, implying a higher required return on equity.
• Revenue Growth edged up to approximately 7.7 percent from about 7.4 percent, indicating a small upgrade to top line expectations.
• Net Profit Margin lowered significantly to around 3.3 percent from roughly 4.6 percent, capturing a more conservative view on profitability.
• Future P E raised meaningfully to about 24.3x from roughly 18.8x, signalling a higher assumed valuation multiple despite margin headwinds.