Liberum’s Leisure team have given their top picks for the May trading round-ups – with operators likely to be reporting sales hit by bad weather in the first part of the year but strong prospects as we move into summer.
The notes says: “The May round of trading updates is likely to show a slowdown in LFL trends across the board, with tough comps and March snow taking their toll. However, Easter was encouraging and the sports calendar should also be helpful. We trim forecasts (ave 2%) but with cost inflation well-understood, we believe we are nearing the end of the downgrade cycle with deep value coming into focus.
Top picks and updates
• Our top pub & restaurant pick remains City Pubs (BUY, TP 210p). Its 2018 pipeline is secure and trading momentum remains positive; we upgrade forecasts by 2-5% and revisit our scenario analysis.
• Greene King (BUY, TP 670p) -trading update reassured with 2018 PBT for £240-245m and divi secure. We trim forecasts by c1.0% to account for snow, but believe evidence of rebranding traction should stimulate a re-rating.
• Marston’s (BUY, TP 130p) - we trim earnings c2.5%and believe capital allocation could flex to accelerate premiumisation / rebranding or prioritise debt reduction while retain high divi.”