A leading analyst has suggested that the expansion of Costa Coffee internationally will move the dial in move the dial in terms of Whitbread's valuation and expect accelerated progress in this area. Wyn Ellis at Numis Securities said: “We believe that the prospects for further strong growth for Costa in the UK are excellent, particularly in light of the recent bad publicity for Starbucks and Caffè Nero re their UK tax positions. “If Costa can demonstrate that the brand has legs in international markets then the earnings growth potential over the medium term should be transformational, paving the way for a possible spin-off. Although Whitbread continues to be an excellent parent for Costa, we believe Whitbread will eventually consider de-merger.” Ellis said that the possibility of a demerger has been the subject of frequent speculation. He said: “But we believe that the maximum value for Whitbread shareholders will only be achieved once Costa has clearly demonstrated success in its international expansion. The essential ingredients for success are, we believe, in place. “Initial seed-corn investment has been made overseas where we expect more franchising, however, we believe the big opportunity is in equity investment. China is close to an inflexion point; Poland is being revamped; and we expect management to soon drive Costa aggressively into W. Europe, France being an obvious initial target. “We expect double-digit earnings growth and have increased our target price from 2350p to 2650p, our recommendation has been upgraded from Hold to Add.”