27th Feb 2024 13:21
(Alliance News) - On The Beach Group's long-term distribution deal with Ryanair is a "significant positive", analysts said on Tuesday.
Shares in On The Beach leapt 13% to 159.80 pence in London on Tuesday.
On the Beach, the Manchester, England-based online beach holidays retailer, said the agreement allows OTB customers to access Ryanair's low fare flights as part of their holiday packages with full price transparency.
Customers would continue to benefit from OTB's flexible payment plans, customer perks, and ATOL protection, the firm said.
On the Beach agreed it will only display Ryanair's real prices, without mark-ups and will only pass all relevant customer contact and payment details to Ryanair.
Liberum analyst Anna Barnfather said: "We see this as a significant positive, removing litigation risk, ensuring customer choice, and simplifying the customer journey".
She pointed out over the last two years, OTB has spent GBP4.5 million on legal and professional fees principally related on-ongoing litigation with Ryanair.
"Hence these funds (and management attention) can now be channelled back into the business", she said.
Barnfather expected the shares to rally as this "removes the major uncertainty that has been hanging over the share price".
She reiterated a 'buy' rating with a 200 pence per share price target.
Katie Cousins hoped the deal would "ensure a better public relationship between the two groups" and said it should "ease investors' concerns", regarding OTB.
Cousins also has a 'buy' rating on OTB.
"The strong OTB brand and growing proposition into premium and long haul should support the group's market position", she said.
"Trading appears robust with a record forward order book and [year-to-date] total transaction value tracking ahead of expectations", she added.
Cousins sees fair value for OTB at 220p per share.
By Jeremy Cutler, Alliance News reporter
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