On The Beach Group PLC (LSE: OTB)

On The Beach Group PLC (LSE: OTB) is an FTSE All-Share index-listed United Kingdom-based online beach holidays retailer. The Company operates through three segments: OTB (onthebeach.co.uk and sunshine.co.uk), CCH (Classic Collection Holidays) and CPH (Classic Package Holidays). The CCH segment includes activity via the tour operator. This Report covers the Key Recommendation Rationale, Valuation and Conclusion on the stock.

Key Recommendation Rationale – Sell at GBX 295.00

• Resistance near Current levels: OTB’s stock price has breached Resistance (R1) which was stated in the previous report on 01 August 2025 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Increased Marketing Spend Impacting Short-Term Profitability - While On the Beach has reported encouraging growth in total transaction value and bookings, the company’s increased investment in marketing—particularly the £1.5 million allocated to expanding its presence in the Republic of Ireland—may weigh on short-term profitability. This additional expenditure, although aimed at supporting longer-term growth, could limit near-term margin improvements and cash flow flexibility, especially if market conditions become less favorable or if returns on marketing spend take longer to materialize than anticipated.
• Reliance on Market Seat Supply and External Factors - On the Beach’s growth is partly dependent on the availability and expansion of airline seat capacity from the U.K. to European destinations, which currently shows positive trends. However, any disruptions in airline capacity, changes in travel regulations, or shifts in consumer travel preferences could potentially slow momentum. The company’s performance might also be affected by broader macroeconomic uncertainties, such as inflation or shifts in consumer spending habits, which could impact demand despite the current booking trends.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

 OTB Daily Technical Chart, Source - Refinitiv

Conclusion

OTB is expected to trade at a discount, considering Reliance on Market Seat Supply and External Factors, and fears of global slowdown. For conducting the valuation, the following peers have been considered - Hostelworld Group PLC (LSE: HSW), Hollywood Bowl Group PLC (LSE: BOWL) and others.

Given its current trading levels, Increased Marketing Spend Impacting Short-Term Profitability, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current Market Price of GBX 295.00 as of 28 August 2025 at 11:06 AM GMT+1.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 28 August 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.