Two FTSE 100 shares set to benefit from an end to pandemic restrictions?

The share prices of FTSE 100 companies Whitbread (LON: WTB) and ITV (LON: ITV) have suffered greatly during the pandemic. Indeed, they continue to trade 25% and 15% lower, respectively, than their price levels from shortly before the 2020 market crash.

While further Covid-19 challenges cannot be completely ruled out, the operating environments for both companies could improve significantly as pandemic restrictions come to an end. With attractive earnings outlooks, sound strategies and an improving economic outlook, they could deliver relatively strong share price performances over the long run.

Whitbread

Whitbread’s latest update highlighted its long-term recovery potential. It delivered outperformance of the wider market, with UK accommodation sales rising by 5.5% on a like-for-like basis. While the emergence of Omicron over recent months may have inhibited its performance of late, an easing of pandemic restrictions may prompt higher demand across its variety of locations.

Furthermore, the firm’s international growth opportunities appear to be robust. It has 32 hotels in Germany, with a further 43 in its pipeline. This could act as a growth catalyst, while also reducing its reliance on the UK economy.
Of course, Whitbread’s market position may have been improved by the pandemic. Its financial strength may mean that it has been better able to overcome hugely challenging trading conditions over the past two years than its smaller peers. And, with an efficiency programme ahead, it may be in a relatively strong position to cope with higher costs.
Looking ahead, the company is forecast to return to profitability in the next financial year. It is then expected to deliver a 49% rise in earnings in the 2024 financial year. Trading on a forward price-earnings ratio of 33, it could offer capital growth potential as sales and profits likely move higher following the end of pandemic-related restrictions.

ITV

ITV’s most recent trading update also suggests it is in a strong position to capitalise on improving trading conditions as pandemic restrictions come to an end. The company’s latest trading update was released prior to the emergence of Omicron, which could mean its more recent performance has been less impressive. However, in the third quarter it generated a 28% rise in revenue versus the prior year.

Encouragingly, the firm’s digital strategy seems to be paying off. ITV’s online viewing increased by 39% in the first nine months of the year, which prompted a 54% rise in video on demand sales. And, with ITV Studios set to benefit in particular from an end to pandemic restrictions, its potential to generate improving revenues could increase significantly.

The firm is forecast to post a 30% rise in earnings per share over the next two financial years. Its forward price-earnings ratio of around 11.5 suggests it continues to offer a relatively wide margin of safety. And, with the UK economy forecast to grow by 3.5% per annum over the next two years, the wider media sector could enjoy solid demand growth for advertising.

Clearly, factors such as the cost of living crisis, higher inflation and ongoing geopolitical risks remain threats to the share prices of ITV and Whitbread. But with significantly better operating conditions likely to be ahead, both stocks could return to their pre-pandemic share prices over the medium term.