Mitchells & Butlers PLC (LSE:MAB) has had profit forecasts increased by Peel Hunt brokers after reporting strong interim results on Wednesday.
Reiterating a ‘buy’ rating, Peel Hunt said it had lifted estimates by 9% following the results, or £15 million a year.
Pre-tax earnings climbed 163% over the first half of the year, the pub chain reported earlier on Wednesday, driven by a 7% increase in like-for-like sales and improving margins.
Net debt was reduced by £137 million to £1.04 billion in the meantime, Peel Hunt pointed out.
“We project a continuation in these trends to reduce the enterprise value to EBITDA from 7.0x to just 5.8x over the next two years,” analysts said.
Alongside this, “There is plenty of potential for the company to improve sales and margins,” Peel Hunt added.
A 340p share price target reflected forecasts that “could have further upgrade potential due to margin upside,” analysts said.
Mitchells & Butlers shares climbed 11% to 297p on Wednesday after the results.