Barclays upgrades Greene King to 'overweight'

23rd Jun 2015 09:51

Barclays upgraded Greene King to 'overweight' from 'equalweight' and raised the target price to 935p from 835p.It said Greene King has one of the strongest investment cases in the sector due to its expansion programme and rising return on capital employed.Barclays pointed to the potential for mid to high single digits earnings growth, augmented by a yield of around 4% yield. "The shares are now trading near their long-term average rating, which looks attractive given the wider market re-rating," said the bank.Barclays said the Spirit deal will drive the enlarged group's return on invested capital higher, from 7% in full-year 2015 to 7.5% in 2017, continuing the group's relatively strong track record of capital allocation.The shares in the enlarged company are due to start trading on 24 June.At 10:33, Greene King shares were up 2.9% at 859.50p.