City broker Numis raised a glass to Revolution Bars Group PLC (LON:RBG) on Monday after the high street bar chain revealed it had enjoyed a strong holiday season – a key period for the industry.
After “relatively soft” summer trading, Numis said it was “reassured” by the second quarter performance as it moved its recommendation to ‘buy’ from ‘add’.
READ: Revolution Bars says it had a ‘strong underlying performance’ but all eyes are on takeover
In total, revenues for the 26 weeks ended 30 December 2017 rose 10.6% year-on-year to £73.7mln (H1 2016: £66.6mln) boosted by the opening of four new sites, while like-for-like sales jumped 5.9% over the key Christmas trading period.
“Even excluding Christmas, we estimate a monthly LFL run rate of around 2%, suggesting that RBG is outperforming the wider pub market (+1%),” wrote Numis analyst Tim Barrett.
The analyst also reckons ‘Revs’ is “well-placed to capitalise on current consumer trends”, particularly the rising demand for things like speciality gins and cocktails.
READ: Prospect of bidding war puts some fizz into Revolution Bars shares
“After a period of volatility under the previous management team (cost overruns and disruption from refurbishments) we are reassured that RBG's underlying business is strong and being well managed,” added Barrett.
On top of his ‘buy’ recommendation, he has a 200p price target for Revolution, implying almost 20% upside from the current market price.
In mid-morning trade, the stock was up 3.1% to 173.2p.