Broker snap: Short-term disappointment at Wetherspoon, says Peel Hunt

9th Mar 2012 11:08

Peel Hunt has cut its target price for pubs group JD Wetherspoon from 490p to 440p, after first-half like-for-like (LFL) sales came in below expectations.LFL sales in six months ended January 22nd fell by 0.7%, compared with the broker's forecast of 2.5% growth, which it said was disappointing given the slightly weaker comparatives. The broker also expected the dividend to be raised by 8% but it was held at 4p.Pre-tax profits, earnings per share and the operating margin, however, were slightly ahead of estimates. "Wetherspoon differentiates from others because of its one-brand concept and it has never allowed short-term considerations to interfere with its brand-building mission. However, repeated caution in the face of cost pressures means investors are facing a short-term plateau with expected flat earnings this year," said analyst Paul Hickman.Peel Hunt has slashed its pre-tax profit forecasts for the current year by 8% to £62.8m, and says its expects to cut pre-tax profit forecasts for the year ending in 2013 by 5% to £67.2m.Nevertheless, Peel Hunt maintains its buy recommendation.BC