City Pub Group PLC’s financial strength should enable it to generate underlying profits of £20mln by 2024, according to broker Peel Hunt.
That compares with £9mln in 2019 before the pandemic struck and 'buy' with a target price of 160p is its investment view.
The broker highlights that the pub chain was back in profit by the end of June in a first half that should have been loss-making due to the impact of the pandemic,
Sales were also running at 90% of 2019 levels at 42 out of 48 of its outlets, even though there were limits on the indoor capacity allowed for much of the recent period and especially during the Euro football championship.
City Pub has one of the strongest balance sheets in the sector, added Peel Hunt, with net debt at the end of June of £24mln and cashflow likely to be positive again from early in the second half.
The current rating of the share is half the historical average, which Peel Hunt believes is an attractive medium-term entry point, especially with the potential to use the balance sheet for expansion.
Shares were 113.5p today.