LONDON (Alliance News) - Analysts were generally pleased with Greene King's trading update on Wednesday, with Panmure Gordon and Numis both upgrading profit forecasts for the pub company's full financial year to May 3.
Greene King reported growth in like-for-like sales in the 40 weeks to February 7, as Greene King retail like-for-like sales were up 2.2% year-on-year and like-for-like sales from the Spirit managed estate grew 1.1%. In the two Christmas weeks, Greene King like-for-like sales increased 5.0%, while Spirit like-for-likes rose 5.2%.
Meanwhile, Pub Partners, which comprises tenanted, franchised and leased pubs, saw its like-for-like net income grow 2.5% in the 40 weeks, while the Brewing & Brands division's own-brewed volume was up 3.9%, driven by growth in Greene King IPA and Old Speckled Hen.
Panmure noted that the pub company's update was in line with expectations and upgraded its pretax profit forecast for financial 2016 by around 1% to 2% to GBP248 million, which it said reflects solid trading. The broker also raised its financial 2017 estimate to GBP280 million, which it said is slightly ahead of consensus.
Greene King reported statutory pretax profit of GBP118.2 million in financial 2015.
Panmure increased its price target on the stock to 1,090 pence from 1,079p and reiterated its Buy recommendation, noting that Greene King offers a three-year earnings per share compound annual growth rate of 9% and attractive 4% dividend yield.
Numis aos upgraded its pretax profit forecast for financial 2016, by 1% to GBP254 million from GBP251 million, predicting 1% like-for-like sales growth in the second half for the managed estate, and 11% earnings per share growth.
The broker reiterated its Add recommendation and 975p price target on the stock.
Meanwhile, both N+1 Singer and Shore Capital retained their profit forecasts, but were still positive of Greene King's results.
N+1 said the update was "satisfactory" and should be viewed "favourably", but said it doesn't think there was enough in the statement to prompt consensus upgrades. The broker currently has an adjusted pretax profit estimate of GBP238.5 million for financial 2016, and maintained its Buy recommendation and 900p price target on the stock.
Shore Capital referred to the update as "reassuring" and consistent with its expectations, as it retained its GBP256 million pretax profit forecast for financial 2016. It did say though that it views its forecast as "conservative" given that underlying proforma operating profit in the first half was GBP1 million ahead of its estimate.
Shore has a Buy recommendation on the stock.
Shares in Greene King were trading up 2.6% at 856.50 pence on Wednesday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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