Leading sector analyst Geof Collyer has issued a Hold recommendation for JD Wetherspoon, predicting the outlook for H2 to be “probably less upbeat than H1”. Ahead of the managed pub operator’s interim results on 9 March, Collyer, of Deutsche Bank, predicted that this will be the second year in a row of a decline in operating margins, with forecasts of -23 bps at the EBITA level. “We are forecasting 11% higher net finance costs following last year’s £50m cash outflow, based on the rollout and £33m spent on opportunistic share buybacks,” said Collyer. “Following the exclusion of treasury shares from the EPS calculation, plus the year-on-yearr benefit of the buyback (-5.4% average shares) and an expected 213 bps cut in the effective tax rate, EPS growth should be significantly ahead of PBT growth.” Collyer said the company will be up against tough comparatives combined with a “dull economic outlook”, along with rising costs. He predicts H2 margins to be below H2 2011 (-60 bps) and H1 2012 (-18 bps). He added: “The rollout on new pubs is back-end loaded this year, with 50 new openings expected for the year, after just 16, net, in H1. It is also possible that the group will discuss its intentions regarding a possible cut in the rollout programme for 2013. We adjusted this figure in our Q1 update from +50 to +25. “Overall, we see the outlook as probably less upbeat than H1, so expect management caution. The shares are trading at our price target [405p].”