Berenberg slashes target on City Pub Group
The City Pub Group
139.00p
16:55 01/03/24
Analysts at Berenberg slashed their target price on City Pub Group from 220.0p to 95.0p on Friday but said the group's recent fundraiser had left the company with a substantial level of liquidity and a best-in-class balance sheet.
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While Berenberg noted the £22m placing was "significantly dilutive", the analysts said that had been captured in the share price already and now thinks the company's roughly £25m of headroom left it in a good place with a cash burn during full closure of just £350,000 per month.
"The raise has left the company with a substantial level of liquidity and a best-in-class balance sheet, which it could deploy on cut-price acquisitions over the medium-term," said Berenberg.
The German bank said City Pub was in "a strong position" to take advantage of the inevitable market turmoil over the next 12-24 months and beyond – although it expects management will deploy any capital with "particular care" and does not expect any acquisitions to take place in the next six months at least.
As a result, Berenberg retained its 'buy' rating on City Pub, despite the significantly lower price target and expectations of cancelled dividends in 2020.