| CATEGORY: BROKER RECOMMENDATIONS SECTOR: TRAVEL & LEISURE |
Broker snap: London focus a positive for Fuller's |
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Fri 20 Nov 2009
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LONDON (SHARECAST) - Pre-tax profits at London Pride brewer Fuller, Smith & Turner were higher than KBC Peel Hunt had expected, prompting the broker to upgrade the pub chain owner to ‘buy’.
‘Fullers is making the most of its Punch acquisitions as well as its excellent beer branding,’ KBC Peel Hunt analyst Paul Hickman opined. The company has made a number of acquisitions from cash-strapped pubs group Punch Taverns this year.
Following the release of Fuller’s interim figures the broker is revising its full year earnings forecasts upwards by 3%, giving a predicted profit before tax figure of £24.5m and an earnings per share estimate of 31p.
Even on the revised estimates Fuller’s trades on a price/earnings ratio of 15.7, which the broker notes is high for the sector, but with the company’s focus on London – an ‘increasingly strong environment,’ in the broker’s view – and the probability of sterling’s weakness continuing to attract tourists to the nation’s capital, KBC reckons the share price could rise as high as 540p over the next 12 months. Previously it had a price target of 510p.
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