WH Smith Softer update and guidance downgrade driven by US, with proposed placing to strengthen balance sheet

Research evidence excerpt

WH Smith Softer update and guidance downgrade driven by US, with proposed placing to strengthen balance sheet

Harry J Gowers AC Europe Equity Research

(44-20) 7134-7522 10 June 2026 C A Z E N O V E

harry.gowers@jpmorgan.com

Investment Thesis, Valuation and Risks

WH Smith (Overweight; Price Target: 700p)

Investment Thesis

We rate WHSmith Overweight. In our view, WHSmith is a higher quality business post the

High Street stores sale, with Travel underpinned by strong long-term fundamentals. Some

overhang has been removed post the Deloitte investigation, and we expect improving

earnings and FCF over the coming years.

Valuation

In our view, WHSmith should trade on a 40% discount to its average multiples from 2014-

19. Our Dec-27 price target of 700p is thus based on the average of the following target

multiples applied to our 2028 forecasts (9x EV/EBIT; 10x P/E).

Risks to Rating and Price Target

WH Smith specific: (1) US profits are structurally much lower post the Deloitte

investigation. (2) WH Smith unable to execute on winning further new space in Travel. (3)

An acceleration in negative structural trends in Travel in certain formats, for example UK

Rail. (4) WH Smith begins to see pressure from airport landlords on contract terms as they

attempt to recoup COVID-19 losses. (5) A prolonged and deep slowdown in spending by

the UK consumer.

Industry risks: (1) A resurgence of COVID-19 or spread of a new variant. (2) Any further

major events (whether natural or man-made) that disrupt national and/or international travel

for a sustained period, particularly at a sensitive time such as the summer holiday season.

(3) Weaker GDP growth results in weaker air or general leisure traffic. (4) The industry is

unable to deal with or pass through inflationary pressures on the cost base.