Broker snap: Greene King's got further to go, says Peel Hunt

Date: Friday 22 Jun 2012

Peel Hunt has hiked its target price for pubs group Greene King and reiterated its 'buy' rating, saying that the stock still has some upside despite the recent strong performance ahead of its full-year results.

"The shares, up 8% in the last week, are clearly now in the process of re-rating as we have predicted. We believe there is much further to go, with Greene King’s leading position likely to become very apparent at the finals," said analyst Paul Hickman.

The firm's results are due on June 28th and Peel Hunt says to expect a beat due a strong fourth quarter. Its forecast is slightly ahead of consensus estimates of £149m in pre-tax profit and 51.9p in earnings per share.

"Retail like-for-like (LFL) sales over-performed the sector average and are strong by any standards, at +4.5% in the final difficult quarter, or +4.6% for the year to date.

"While the final two weeks will be lower against the tough Royal Wedding comparative, which may reduce Q4 as low as +2% LFL, this is an excellent result in a tough year, and certainly well ahead of the 2-3% growth required to offset inflationary input pressure," Hickman said.

The target price is raised from 561p to 617p.

Shares were trading 0.86% lower at 519.5p on Friday morning.

BC

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