Forsyth Barr broker Suzanne Kinnaird said camper van operator Tourism Holdings had not only benefited from the industry tailwinds, but also strong strategic and operational management decision-making and also strategy execution.
"Tourism Holdings’ history since the 1980s has been a story of booms and busts," she said.
While highlighting that she did not believe Tourism Holdings was on the cusp of a bust cycle, she said the prolonged recent tourism boom in recent years and the rating downgrade was over stock valuation concerns.
Forsyth Barr’s recommendation has been downgraded from "outperform" to "neutral", with the target price unchanged at $4.75.
"While we don’t expect demand to decline through our outlook period, we expect the rate of growth to slow," Mrs Kinnaird said.
Earnings growth and return on capital improvements would continue, driven by synergies in the US-based El Monte operations and underlying demand growth, she said.
"However, this positive outlook is more than factored into the current share price," Mrs Kinnaird said.
"Tourism Holdings’ improving return on capital in recent years has been impressive," she said.
However, the returns generated in key markets, in particular New Zealand, were now high and at risk from encouraging more new entrants, with two coming to the New Zealand market during the past two years.
"While still susceptible to external tourism shocks, we think the company can better manage these now than in the past," she said.
Mrs Kinnaird expected an earnings guidance update for full-year 2018 when Tourism Holdings had its annual shareholder meeting on October 18.
