City Pub Group on “strong trajectory”, has firepower to target new opportunities in post-pandemic world, says house broker
The City Pub Group PLCs (LON:CPC) recent full-year results, whole historic, are a reminder of the “strong trajectory” the company is on and can be expected to return once lockdown restrictions are eased, according to the companys house broker.
In a note on Friday, analysts at Liberum also said the company had “the firepower to take advantage of new opportunities that this crisis will inevitably present, while remaining conservatively leveraged”, and retained their buy rating on the stock alongside a reduction in the target price to 135p from 155p.
READ: The City Pub Group highlights significant growth in 2019, prepares to reopen estate
“With a strengthened balance sheet and streamlined business, we believe it is well placed to capture share with its large outlets benefiting from outside space and customers desire to stay local”, the broker said, adding that it had identified the companys accommodation offering as a “key growth area”.
“The group has undergone significant growth in its accommodation offer with total bedroom increasing to 172 in FY19 (FY18: 54). This has been a purposeful strategy by the board as it delivers an additional revenue stream with little additional cost, therefore generating high margin returns”, Liberum said.
“Furthermore, the premium accommodation product is complementary to the existing pub business and increases cross-sell opportunities”, they added.
Several advantages
Looking to the easing of lockdown, while Liberum said the shape of demand and footfall for pubs once they reopened was unclear given likely government restrictions and low consumer confidence, City Pubs had “several characteristics that should see it comparatively outperform peers”.
“Its pubs are located in Cathedral cities, with multiple pubs trading in areas whereRead More – Source
