Broker snap: Brokers raise glass to Wetherspoon

11th Sep 2009 12:57

So long as the UK pub-goer remains in cash preservation mode, earnings forecasts for pub group JD Wetherspoon look eminently achievable reckons Charles Stanley.'We anticipate that JDW [JD Wetherspoon] will continue to prosper with a consumer that remains entirely driven by value, which is where the group has positioned itself. In addition, the news that additional sites are being secured at lower rents and rebranded at reduced average fit-out costs should reinforce the argument that the group is a net beneficiary of the current trading environment,' states Charles Stanley analyst James Dawson.The main drag on the share price is likely to be concern over the company's debt position, the broker reckons.'Consistent with the entire pubs sector, there remain concerns over refinancing issues at JDW and the next date for news looms in Sep-09 ... Positive refinancing news will leave the way clear for share price appreciation,' Dawson believes.The broker has reiterated its 'buy' recommendation and 495p price target.Broker KBC Peel Hunt has also reiterated its 'buy' recommendation but has lifted its price target from 520p to 590p following the pub group's full year results on Friday morning.'The shares are up 28% in the last quarter but are not yet up with events in our view, with a further 46% to rise against their 2006 high,' states KBC analyst Paul Hickman.The broker is upgrading its profit before tax forecast for the current financial year by 7% to £73.1m. 'This produces 10% earnings growth against 18% for FY09. We believe there is plenty more potential for upgrades,' Hickman said. 'Our FY11 forecast similarly gives 10% growth to PBT [profit before tax] £ 80.2m and EPS 39.3p,' he added.