Pub-picking Berenberg upgrades Wetherspoons, downgrades Greene King, Marston's
Analysts at Berenberg provided a mixed review of the UK pubs sector on Wednesday, as it upgraded JD Wetherspoon to ‘hold’ from ‘sell’.
However, Greene King and Marston’s were downgraded to ‘sell’ and ‘hold’ respectively after choppy trading during the summer months.
While analysts said that Wetherspoons continues to operate capital poorly, revenue deriving from its new mobile app has helped to shore up its books.
Berenberg sees Spoons' recent "exceptional" like-for-like sales growth continuing in the near term, thus balancing out its risk for the moment. It also increased the company’s target price to 1,150p from 750p.
Berenberg moved Greene King on to 'sell', even though shares have declined 15% since 8 September: “With LFL growth likely to remain under pressure, margins declining, and leverage set to remain stubbornly high, we see few reasons to own the shares."
Greene’s target price was reduced to 450p from 700p by the bank.
Lastly, Marston’s was also downgraded to ‘hold’ from ‘buy’, though analysts stressed it remained a “well-run business”.
“While we believe Marston’s has the most disciplined approach to investment of its non-premium pub peers, we feel the shares are likely to tread water until a degree of confidence returns on the LFL sales outlook,” the note said.