Brokers tip pub group Marston’s as a ‘buy’

27th November 2014

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Despite a dip in annual profits and a lacklustre share price performance brokers are tipping pub group Marston’s as a ‘buy’.

This morning the FTSE 250 constituent, which has endured a 7% share price fall over the past six months, announced that in the year to 4 October group revenue edged up by 1% to £787.6m while underlying profit before tax dropped 3.6% to £83m.

However analysts at both Numis Securities and N1 Singer have reiterated ‘buy’ recommendations on the stock, as has The Share Centre.

Helal Miah, investment research analyst at the latter firm said that the results were more or less in line with expectations and going forward he believes that the business, which owns the Wychwood and Brakspear brands, is well placed to benefit from ongoing recovery and remains a ‘buy’ for investors.

Marston’s has been disposing of weaker pubs and implementing new development plans and Miah asserted that the continued transformation of the group should leave it better placed.

He said: “Over the last two years the group has been transforming its pubs assets by developing franchise style pubs which focus on food and drinks, while disposing of older drinks led pubs. Franchise style pubs now generate roughly 75% of the company’s profits and give it better control over the retail offer. This was an excellent year for the brewing division as consumers tastes have trended towards regional and premium beers.”

Ralph Findlay, Marston’s chief executive, said: “There are some signs of modest economic improvement, with the emergence of real wage growth and resilience within the economic regions outside London. Looking forward, we will continue with our expansion strategy to invest in at least 25 new-build pubs each year. We also remain on track to dispose of the residual 200 pubs targeted for sale from our Taverns estate over the next 12 months to create the desired structure for our business for the future.”

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