In a report released on September 25, James Wheatcroft from Jefferies maintained a Buy rating on Mitchells & Butlers, with a price target of p355.00.
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James Wheatcroft has given his Buy rating due to a combination of factors that highlight Mitchells & Butlers’ potential for long-term growth. Despite a recent dip in like-for-like sales in the fourth quarter, the company is expected to align with current consensus estimates for FY25E, indicating stability in its financial outlook. Wheatcroft notes that the company is well-positioned to capture market share, thanks to its scale, leadership in the sector, and a diverse product portfolio.
Additionally, Mitchells & Butlers’ predominantly freehold estate and leverage at approximately 2x net debt/EBITDA suggest strong cash generation capabilities. This financial strength is anticipated to facilitate a significant transfer of value from debt to equity over the next few years. The company’s valuation at 6.8x FY26E EV/EBITDA remains attractive, especially when compared to pre-COVID levels, making it a preferred choice in the pub sector according to Wheatcroft.
In another report released on September 26, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a p293.00 price target.