Berenberg slashes target on City Pub Group

17th Apr 2020 10:24

(Sharecast News) - Analysts at Berenberg slashed their target price on City Pub Group from 220.0p to 95.0p on Friday but said the group's recent fundraiser had left the company with a substantial level of liquidity and a best-in-class balance sheet.
While Berenberg noted the ?22m placing was "significantly dilutive", the analysts said that had been captured in the share price already and now thinks the company's roughly ?25m of headroom left it in a good place with a cash burn during full closure of just ?350,000 per month.

"The raise has left the company with a substantial level of liquidity and a best-in-class balance sheet, which it could deploy on cut-price acquisitions over the medium-term," said Berenberg.

The German bank said City Pub was in "a strong position" to take advantage of the inevitable market turmoil over the next 12-24 months and beyond - although it expects management will deploy any capital with "particular care" and does not expect any acquisitions to take place in the next six months at least.

As a result, Berenberg retained its 'buy' rating on City Pub, despite the significantly lower price target and expectations of cancelled dividends in 2020.