Leading analyst Karl Burns has downgraded his full-year earnings per share estimate for Marston’s by c4% following its interim management statement last week.
Burns, of Panmure Gordon, reiterated his Hold recommendation and 135p Target Price of the company. He said: “Following last week’s IMS we have downgraded our FY 2013-15E by c4% per annum to reflect weaker than anticipated trading in Inns & Taverns and consequent accelerated disposal activity in this division with proceeds recycled into more openings in its Premium & Destination pubs.
“Whilst this is a sensible strategy it is not without it risks at a time when other operators are also increasing the number of new site openings. On our revised forecasts the stock trades on a CY 2014E adjusted EV/EBITDAR of 8.6x which is not expensive relative to the peers but consistent downgrades justify this discount. The 4.4% yield remains attractive and seemingly secure and hence we reiterate our Hold recommendation and 135p Target Price.”
He added: “The trading outlook for FY 2014E is more encouraging than for many years with consumer confidence at a four-year high and CBI forecasting growth in real household disposable income. However beer volumes remain in negative territory and the FIFA World Cup will be as much a hindrance to its food-led new build managed pubs as it is a help to its wet-led community pubs.
“For FY 2013E we now forecast £88.4m PBT (12.1p EPS) which on a 52- week basis is below the prior year which we view as a disappointing performance. In FY 2014E we forecast £92.9m PBT (12.6p EPS) rising to £102.9m PBT (13.9p EPS) in FY 2015E when the benefit of accelerated capital into new build pubs should be felt.”
