Broker snap: Wetherspoon slightly more positive

14th Jul 2010 13:05

Panmure Gordon has shaved its price target for JD Wetherspoon but that is more of a reflection of the broker's viewpoint on the economic environment than any reaction to the pubs group's trading update.The broker has shaved 1% or so of its fiscal 2010 earnings estimates and circa 3% from its fiscal 2011 and 2012 forecasts to reflect slightly harsher macro-economic conditions. The price target has been trimmed to 580p from 595p, though the "buy" recommendation has been maintained."The group appears slightly more positive on its prospects for FY 2011E [fiscal 2011 estimates], and is confident of a resilient performance despite the taxation and employment pressures in the economy as well as higher interest rates following the group's refinancing," Panmure Gordon said. The group "remains confident that there are substantial opportunities to acquire sites at reasonable prices," the broker added, noting in passing that it expects the ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) to be around 2.8:1 at the end of the year.