Leading sector analyst Simon French has reiterated his Sell recommendation and 301p Target Price for Mitchells & Butlers (M&B) ahead of its Q3 interim management statement next Thursday, although he anticipated a “strong trading update”.
French, of Panmure Gordon, said he forecast like-for-like sales growth of c4% for the nine weeks to 20 July.
“We therefore expect management to reiterate its confidence in meeting consensus expectations of £180.2m PBT (33.6p EPS). The stock trades on a CY 2014E adjusted EV/EBITDAR of 8.0x which is an unwarranted premium to Spirit Pub Company and Wetherspoons given the weaker earnings growth, significant pension deficit and consequent lack of dividend.”
French added: “The group expects consumer confidence and discretionary income growth to remain subdued for some time to come.”
