Broker snap: Wetherspoon a "long-term winner"

23rd Jun 2009 12:38

Morgan Stanley sees pub group JD Wetherspoon as a "long-term winner" in the pub sector and reckons the slide in the company's share price since mid-April offers the opportunity to get a round of shares in at a good price."With the shares off 18% in the last three months, we think the refinancing risks are well reflected in the price," Morgan Stanley states, after upgrading its rating on the stock from "underweight" to "overweight". The US bank's target price for the cut price food and ale purveyor has been lifted to 480p from 440p. The target price, if achieved, would comfortably beat the stock's 52-week high."Its market share gains are accelerating, and we expect it to continue to generate 2-3% (like-for-like) sales growth in the medium term, enough to drive consistent double-digit EPS growth," the US bank said.In keeping with many other highly-geared pub companies, the share price of Wetherspoon has been under a cloud because of fears that the company will need to raise capital to reduce its debt burden.