Broker snap: Panmure lifts Wetherspoon estimates

14th Sep 2009 11:41

Panmure Gordon has upgraded its earnings forecasts for JD Wetherspoon after the pub group announced better than expected full year results last week.Although the broker has a 'buy' recommendation on the stock its profit before tax forecasts for fiscal 2010 and 2011 were below market consensus; Panmure Gordon has now upped its 2010 and 2011 forecasts by 22% and 21% respectively.It is forecasting profit before tax of £72m for the year to end-July 2010, and pre-tax profit of £77.6m for fiscal 2011. The brokoer's price target has been lifted to 600p from 585p.Although Wetherspoon said that like for like (LFL) sales had risen by 1.2% in the first six weeks of the new financial year, Panmure Gordin is adopting a cautious approach and forecasting zero growth in LFL sales over the full year.'Given the operational gearing in the business model, any LFL sales growth outperformance would likely lead to significant EPS upgrades (1% LFL sales growth =c7% EPS growth). However, the group may choose to re-invest gross margin in further price reductions for the consumer to drive market share,' analyst Simon French said.