Leading analyst Simon French has increased his Target Price for Enterprise Inns from 123p to 133p following its full-year results last week.
French, of Panmure Gordon, reiterated his Hold recommendation and said: “We have updated our Enterprise Inns model following last week’s FY 2013A results leading to minor downgrades this year and next; we forecast £118m PBT in FY 2014E rising to £121m in FY 2015E. We do not forecast the resumption of dividend payments but our cash flow forecasts suggest this is most likely to occur in FY 2015E.
“Comparatives are relatively easy for FY 2014E, particularly in H1, whilst H2 performance should be boosted by the FIFA World Cup. The appointment of Simon Townsend as CEO from 6 February should ensure a seamless transition from the ‘Tuppen era’. Government intervention in the sector through the form of a statutory code remains an unwelcome but unlikely prospect.
“Our target price edges up to 133p based on a CY 2014E adjusted EV/EBITDAR of 10.0x (equivalent to a P/E of 7.2x) and we reiterate our Hold recommendation.”
