6th Feb 2019 12:55
LONDON (Alliance News) - Berenberg on Tuesday said it continues to believe that JD Wetherspoon shares are "too cheap", as the broker thinks positive returns to shareholders will continue.
At the end of January, the FTSE 250 pub operator reported like-for-like sales up 6.3% year-on-year in the first half of its financial year to January 20.
"That comes on top of 6.1% like-for-like growth in the first half last year, taking two-year like-for-like growth to over 12% – almost all of which is driven by volume," Berenberg said. "With the company continuing to boast a substantial value-for-money advantage over peers and investment in existing sites seemingly on the rise, we think like-for-like growth will remain strong for the foreseeable future."
Wetherspoon however, has guided for a drop in its interim profit hurt by higher labour costs. Its full-year expectations remain unchanged.
Berenberg forecasts full-year 2019 sales to rise to GBP1.76 billion from GBP1.69 billion a year ago. Earnings before interest, tax, depreciation and amortisation are expected almost flat at GBP217.0 million from GBP211.0 million a year ago.
"We believe JD Wetherspoon's management is building long-term value which can contribute to continued compound returns over the next decade," Berenberg said.
The analyst has the stock at Buy with a price target of 1,400 pence per share. Wetherspoon shares were trading up 0.9% at 1,243.00p on Wednesday afternoon.
Related Shares:
Wetherspoon (J.D)