Broker snap: Cautious Wetherspoon's target price cut

5th May 2010 10:26

A cautious third quarter trading update from JD Wetherspoon has prompted KBC Peel Hunt to trim its target price on the budget pub chain, to 600p from 620p.However, the broker remains confident on Wetherspoon's prospects and keeps its 'buy' rating on the pub group.It notes the slight weakening in trading and the company's caution on prospects for next year, but also nods to Wetherspoon's 'scalability,' its ability to apply its cheap pub model throughout the country.'We believe Wetherspoon as a branded system is significantly more scalable than the rest of the pub industry,' the broker says.One important detail from the statement that Panmure picks up on is the reduction in Panmure's opening target to 45 new pubs for the full year from 50 previously.But in the short term, Panmure sees Wetherspoon benefitting from the World Cup and it thinks that the company is likely to perform well relative to the rest of the sector as economic conditions remain difficult.