Broker Tips: JD Wetherspoon, Restaurant Group, Royal Mail, James Fisher
Berenberg on Thursday revised his ratings on a number of leisure stocks, from pubs to restaurants to travel agencies.
The declassified bank JD Wetherspoon to “hold back” from “buy” and reduce its target price on the share to 1,050.0%.
“However, we believe it may be some time before the kind of selling momentum needed to drive a significant re-evaluation of its already industry-leading valuation multiples returns to the company.
“As a result, we are lowering our rating to maintain it but continue to fundamentally like stocks when there is a big drop.”
owner of Wagamama Group of restaurants was raised to “buy” from “hold” with an increased price target of 125.0 pence from 110.0 pence, saying it was heating up at Restaurant Group “for some time now”, and with stocks roughly 30% below last year’s highs, now was the time to update the recommendation.
“With the right management now in place, we believe the company can increase earnings per share at a double-digit rate for the foreseeable future, believe there is room for improvement in our earnings estimates recovered in 2023 and beyond that, and consider the company to be the market leader and a natural consolidator in the medium term. “
Barclays raised its course target on Royal courier at 640.0p from 550.0p on Thursday, citing growth expectations for fiscal 23.
The bank said it expects “strong” Christmas deals, as indicated by the recent discretionary retail spending signal “Barclays UK Spend Trends”.
“UK national volumes continue to be supported by antigen testing kits, which have increased with the emergence of the Omicron variant,” he said.
Barclays also maintained its rating on Royal Mail at “overweight”.
Analysts Canaccord Genuity reduced their price target on the marine engineering service provider James fisher from 1375.0 pence to 625.0 pence on Thursday, but said they remained “calm buyers” of the stock.
Canaccord said James Fisher had had “a difficult year 2021,” with three profit warnings triggered by a mix of demand slowdown linked to the Covid-19 pandemic, marine oil and gas slowdowns, challenges specific to customers and “a broader sense of Fisher’s longstanding uniqueness being lost”.
However, as the Canadian bank said it was changing its forecast, updating its earnings to “more rectified circumstances” and “taking a more cautious view of dividends and cash generation,” it also noted that the key markets Fisher was exposed to were “starting to improve.”
“In particular, we are seeing a sharp rise in the wave of activity in offshore wind, mainly towards 2023, and in the shorter term of the recovery in oil and gas markets globally,” noted analysts.
“Given the weakness of the markets and the need to restore confidence, we are lowering our multiple target to a much more sober EV / EBITDA 7x / 6x 22 / 23E (at its peak, Fisher was enjoying an EBITDA at two-digit multiple) and our target price moves accordingly to 625.0 pence (from 1375.0 pence). We remain chastened BUYERS. “