Canaccord raises target price on Mitchells & Butlers
Mitchells & Butlers
225.80p
16:40 28/03/24
Analysts at Canaccord Genuity raised their target price on pub landlord Mitchells & Butlers from 400p to 530p on Thursday, stating better than expected preliminary results showed the firm was continuing to outperform the market.
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Canaccord increased its earnings per share forecasts for Mitchells & Butlers 7.9% to 39.0p for 2020 and 7.0% to 40.8p for 2021.
"M&B's better than expected prelims show that it continues to outperform the market due to a broad-based performance, driven by its Ignite self-help programme," said Canaccord.
"We retain our 'buy' recommendation but hike our target price to 530p from 400p; the agreed bids for Ei Group and Greene King at 38.5% and 51% premiums to their last undisturbed share prices are reminders of the latent value of the asset-intense pubcos in general and M&B in particular."
The Canadian broker also noted that performance across all 14 brands was positive, something which has not happened for "many, many years" according to M&B chief executive Phil Urban.
Premium Country Pubs and Miller & Carter were the stand-out performers.
"This is a good performance. Looking forward, we assume +2% L4L sales growth but 20bps of operating margin erosion in FY20E moderating to a decline of 10bps pa for the outer years. The cost pressures remain intense but similar to last year."