Marston’s Hold Rating: Balancing Revenue Stability Against Debt Concerns and Limited Upside Potential

James Wheatcroft, an analyst from Jefferies, maintained the Hold rating on Marston’s (MARS – Research Report). The associated price target is p44.00.

James Wheatcroft’s rating is based on a combination of factors that reflect both positive and challenging aspects of Marston’s current financial situation. On the positive side, Marston’s has shown stability in its revenues despite asset disposals and has achieved a notable increase in EBITDA margin due to improved labor management and procurement strategies. This performance supports confidence in meeting the full-year financial expectations, even as the company faces wage inflation pressures in the second half of 2025.
However, the company’s substantial debt level remains a significant concern, with net debt standing at £881 million, equating to 4.9 times its EBITDA. The planned bond amortization payments are expected to consume most of the targeted £50 million in annual free cash flow, limiting the potential for dividend payouts or additional growth investments. Additionally, while the company’s valuation is slightly below historical levels, the equity component of Marston’s enterprise value is relatively small, making the stock price highly sensitive to changes in the enterprise value. These factors collectively justify the Hold rating, as they suggest limited upside potential in the near term.