Investors in the pubs groups Greene King PC (LON:GNK) and Marston’s PLC (LON:MARS) may require a stiff drink before reading the latest research on the sector by Berenberg.
The German bank’s analysts downgraded their rating for Greene King to ‘sell’ from ‘hold’, and chopped their target price back to 450p, down from 700p. In morning trading, the stock was 2.2%, or 12p lower at 537p.
READ: Greene King shares tank as sales fall on bad weather and weak consumer spending
The analysts provided a bleak commentary on the firm: “We see little reason to hold the company as like-for-like sales are deteriorating, margins are declining, there appears to be no deleveraging ahead, and we think there is some risk that the new chief financial officer (who is joining in December) could look to re-base expectations more materially.”
They also cut their stance on Marston’s to ‘hold’ from ‘buy’, with a reduced target price of 120p, down from 175p – its stock was down 2.2%, or 2.5p at 106.1p.
The analysts damned Marston’s with faint praise - a well-run business that will tread water, to paraphrase.
READ: Wetherspoon booms as profits surge
They did upgrade their rating for JD Wetherspoon PLC (LON:JDW), but the move could at best be described as grudging.
Moving to ‘hold’ from ‘sell’, and upping the target price to 1,150p from 750p, Berenberg said: “While we continue to believe that the company has deployed capital poorly in recent years, its app has created strong like-for-like sales momentum, which we expect to continue in the near term.”
Wetherspoon shares were up 2.5%, or 31p at 1,264p.