Investec said TRG has made “strong progress” against its FY25 targets.
Recommending Buy, the investment bank said the group had reported strong LFLs, particular for Wagamama, Concessions and Pubs.
Cost savings of £5m put TRG ahead of management’s profitability and deleveraging targets set in March.
“These are all very robust trading indications which prompt us to (conservatively) upgrade our FY23/24/25E EBITDA by 5%/7%/4%,” the analyst noted.
Investec added with good forward visibility, it sees the stock as “significantly undervalued”.
Stifel said TRG’s current trading remains strong, with incremental cost-savings meaning profit before tax expectations are likely to drift up by around £3m this year, and £4-5m in 2024/25 (+10%).
With the company to now report full segmental disclosure from H1 results in September, this should help the market to assess sum-of-the-parts (SOTP) value, which “we feel is not duly reflected in the equity valuation”.
Stifel said Wagamana and Pubs saw good results, despite some soft comps (Omicron).
“We remain Buy rated because we believe Wagamama and Brunning & Price pubs are quality assets undervalued by the market, with potential to unlock significant equity value,” the analsyst concluded.
Barclays said the financial statement was “strong across the board” with trading holding up well despite consumer spending headwinds, cost savings have been upgraded, and the Wagamama rollout being slightly upgraded.
“The only disappointment we can see would be through the lens of an activist given there is no corporate action announced, albeit the statement does say ‘the Board continues to consider long term strategic options’,” Barclays reports.
The bank added that enhanced segmental financial disclosure for all four divisions may assist investors’ understanding of whether there is “value to be created from disposals and/or highlight the value of Wagamama”.
