Broker snap: JD Wetherspoon's outlook 'more positive', says Panmure

24th Jul 2013 11:08

Panmure Gordon has reiterated its 'buy' rating for the pubs group JD Wetherspoon on the back of a well-received fourth-quarter trading statement.The company said on Wednesday that full-year results would be slightly ahead of than previously anticipated after a strong fourth quarter, which saw sales rise 6.2%.The operating margin was 9.5% in the 11 weeks to July 14th, "significantly ahead of our expectations", Panmure said.The broker expects profit before tax consensus forecasts for the current year to increase 2-4% to £74-75m following this update. While the current estimate for next year is £77.5m, the risk appears to be on the upside up to around £84m."The outlook for FY 2014E is more positive with 30 new pub openings now targeted (previously 20-25) and an indication that a margin of 8.7% is achievable if reasonable sales growth is achieved."The broker said that the stock trades at a discount to the wider peer group. "Given the solid top-line performance and improving margin outlook we expect this discount to narrow. Therefore we reiterate our 'buy' recommendation and 738p target price."The stock had jumped 6.21% to 709.5p by 11:07.BC