DAVY VIEW

We update our model and valuation methodology for Hostelworld (HSW), setting a new price target of 156p per share. FY24 has seen slightly weaker revenue generation than expected as customers prioritise lower cost destinations. However, offsetting this, the group has made further progress on its ‘social strategy’. This strategy, combined with good cash discipline, has led to better margins and efficient free cash flow generation. Bank debt has also been repaid earlier than anticipated. We maintain our FY25 aEBITDA forecasts of €24.3m and increase EPS slightly. We retain our ‘Outperform’ rating and believe solid underlying growth can be boosted by additional capital deployment from its low levered balance sheet.