Panmure Liberum has upgraded its price target on pub chain Marston’s PLC (LSE:MARS) from 70p to 80p per share with a maintained 'buy' rating.
The upgrade was driven by Marston's “ability to generate sustainable and reliable operating (free cash flow), removing its reliance on asset disposals to fund capex and debt amortisation”.
Analysts reckon Martson’s can deliver over £50 million in free cash flow annually, while also targeting a 200-300 basis point increase to the EBITDA margin.
Marston’s strategy of transitioning into a pure-play pub operator after exiting its brewing joint venture with Carlsberg is expected to improve its cash generation
Despite the bullish price target, brokers like Panmure Liberum might be able to adjust their profit targets following Wednesday’s Autumn Budget.
The hospitality industry faces a potential double whammy of higher minimum wage and national insurance obligations, particularly if Chancellor Rachel Reeves ignores pleas by the sector to commit to business rates relief.
Marston’s shares are currently swapping for a flat 40p.