JPMorgan has turned flat on brewer and pubs operator Greene King PLC (LON:GNK), downgrading its rating following mixed full-year results yesterday.
The US bank has cut its stance for the FTSE 250-listed firm to ‘neutral’ from ‘overweight’ and reduced its target price to 750p from 810p.
In reaction, in early morning trading, Greene King shares were almost 3.5%, or 24.0p lower ay 664.5p.
READ: Greene King's full-year profits fall on Spirit Pub integration costs
In a note to clients, JPMorgan analysts said: “The cost headwinds facing the pub sector are significant.
"While Greene King was integrating its acquisition of Spirit, it had an opportunity to offset some of these pressures through the delivery of synergies. The integration is now complete, but the cost pressures remain.”
They added: “With the risk that UK consumer spending will deteriorate in the months and years ahead, it is difficult to see a positive catalyst on the horizon."
The analysts continued: “In recent months, shares in Greene King have generally underperformed as the cost pressures have intensified.
“In the absence of a compelling catalyst to cause a bounce-back, we downgrade our rating”.