A leading analyst has said that Enterprise Inns (ETI) share price represents an exceptional opportunity for value investors, as the company is over the worst. With the group set to issue a trading update next week, Simon French of Panmure Gordon, said: “We anticipate that like-for-like net income per pub in the substantive estate will remain down c2% YTD. However, we remain confident that the company is over the worst and that, with average income per pub growing and debt levels reduced, the current share price represents an exceptional opportunity for value investors; the group trades on a CY 2011E P/E of 2.6x. We reiterate our Buy recommendation and 110p price target; c83% upside potential.” French said that the group’s interim results were slightly below expectations, “partly reflecting the higher rents payable post the sale and leaseback and also due to a £1m increase in support costs, reflecting the poor trading environment in the run up to Christmas” He said: “Encouragingly, average profit per pub grew 1% in February and March and we expect this trend to continue into H2, which had started well. LFL profit growth will take longer to achieve but we believe there is nothing structurally wrong with the group’s pub estate to prevent it from returning to growth.” The analyst said that Enterprise’s free cash flow generation would be strong enough to meet all its bond debt obligations, and bank debt amortisation potentially paving the way for a successful c£350m refinancing in c.18 months. He said: “We are encouraged by the improving rate of decline in industry on-trade beer volumes (H1 -4.2% YOY, source BBPA) and believe that, if the rate of decline can stabilise at c-4% per annum, then the Enterprise pub estate should be able to generate LFL EBITDA growth, given rental income is predominantly linked to RPI. “The stock offers significant upside potential, in our view, as it demonstrates it can service its debt profile and the equity component of the EV increases substantially.”