Analyst at Berenberg lowered their target price on pub landlord Fuller, Smith & Turner from 1,000.0p to 850.0p on Monday but acknowledged that London’s recovery was building steam.
Berenberg said it believes that the risk/reward trade-off for Fuller, Smith & Turner shares was “attractive”, stating that while the company’s trading performance had lagged that of its listed peers, it believes that can be put down to its “significant exposure” to central London.
With data increasingly pointing towards an uptick in the capital’s recovery, Berenberg expects that the next update from the company will be “far more positive” on recent trading.
The German bank, which reiterated its ‘buy’ rating on the stock, also thinks that the business is less exposed to a consumer squeeze than most, given its more affluent customer base, and thinks that, at its current valuation, Fuller’s asset backing should provide “plenty of support”.
“Fuller’s has not undertaken a valuation of its estate since 2019 and, as a result, we believe that there is significant hidden value in its estate where it owns circa 90% of the freeholds. We believe that a mark-to-market valuation would put the estate’s value at over £600.0m – which is more than the current EV of circa £500.0m,” said Berenberg.
