Mitchells & Butlers PLC (LSE:MAB) shares rose more than 5% in early trading on Thursday after analysts at Jefferies Group (NYSE:JEF) upgraded it to a ‘buy’.
The hospitality industry may finally be making headways after being weighed down by covid and the cost-of-living crisis over the last few years, as the US bank offered a bullish statement about the firm.
It comes after the group saw revenues jump more than 10% annually to reach £1.2bln in the first half of 2023.
The Miller & Carter owner’s robust sales momentum and the potential for cost pressures, which have soared in recent times, to subside is enough for analysts at Jefferies to increase its price target by 59% to 270p from 170p.
Growth in London-based business and a return of older customers have helped drive the sales momentum, Jefferies added.
“As a scaled managed pub operator with a well-invested 80% freehold, well-located, food-oriented pub estate, we argue M&B should win material market share as other smaller operators struggle,” said the US investment bank.
The number of pubs operating in the UK has dropped by 12% since March 2020 and by 4.3% in the last year.
The group is poised to grab this free market share as its “diverse portfolio of brands” can offer varying pricing with its range of brands from O’Neil’s to Premium Country Pubs, Jefferies said.
Shares in M&B opened at 205p on Thursday and despite being up 45% in 2023, it remains behind the 420p heights seen pre-pandemic.