Leading sector analyst Paul Hickman has said that Fuller’s represents a buying opportunity after the London brewer and pub operator reported a 1.1% fall in managed like-for-like sales in the 15 weeks to 14 July.
Hickman, of Peel Hunt, issued a Buy recommendation for Fuller’s and said: “Fuller’s first quarter was disappointing as a result of rain affecting its many gardens, usually a positive feature.
“However, its massive investment in new pubs is performing well and it is excellently positioned to benefit from the
Olympics, particularly at stations. We therefore believe that upgrades later this year remain likely and, with 11% headroom to our TP, any dip in the share price should be taken as a buying opportunity.”
Meanwhile, Lindsey Kerrigan at Panmure Gordon reiterated her Hold recommendation, saying that she prefers Young’s for those who seek exposure to London.
“The company has reported that total sales for managed pubs and hotels grew 8%, but that the effect of the wet weather has caused LFL sales to decline 1.1%. This is versus our forecast of +1.0%, but is an improvement on the -2.3% reported for the first eight weeks of the year to 26 May, therefore implying sales are up 0.3% for the last seven week period.
“The company says that the 30 pubs acquired last year are performing well and in line with expectations. Six of the 13 managed pubs acquired have now been refurbished and the rest will receive investment during the remainder of this financial year. The group’s recent analyst evening was well received and highlighted the impressive nature of recently acquired/opened assets.
“For FY 2013E consensus forecasts are for £32.2m PBT (42.2p EPS) and our forecast is in line with consensus expectations. In FY 2013E we forecast £33.6m PBT (44.6p EPS) which is again in line with consensus. Our three-year forecasts imply a CAGR in EPS of 6.2%.”
