Analysts at investment bank Jefferies are the latest to throw their weight behind hospitality group Mitchells & Butlers PLC (LSE:MAB) with an upgraded price target and firm buy rating.
City analysts across the board have reacted positively to the All Bar One and Harvester owner’s latest financial results, with Deutsche Bank, Peel Hunt and Shore Capital Markets all heaping praise on the Birmingham-headquartered group.
For Jefferies, Mitchells is the top stock pick in the wider UK pubs and restaurants sector.
The bank’s investment thesis is based on strong cash generation, lower debt levels, a mainly freehold estate and “scale to gain market share as smaller operators exit”.
Analysts also highlighted “guest and staff reviews which have never been higher” and an eight-year track record of like-for-like “sales market outperformance”.
With the scale to gain market share as smaller operators exit, the company also benefits from a diversified portfolio catering to a broad range of consumer expectations and high guest and staff reviews.
Mitchells reported first-half revenues up 9% to £1.4 billion year-on-year, operating profit growth of 66% to £164 million, and a like-for-like sales increase of 7%.
Jefferies has a buy rating with a 355p price target.
Shares are currently trading at 311p, marking a 22% year-to-date performance.