Greene King downgraded to 'hold' by N+1 Singer

6th May 2015 10:32

N+1 Singer has cut its recommendation for Greene King from 'buy' to 'hold' after a "soft trading update" from the pubs group on Tuesday.Analyst Sahill Shan said that guidance for a higher net-interest charge and lower assumed like-for-like (LFL) sales growth has prompted downgrades to forecasts over the next three years."We [...] retire our 'buy' which has served us well since late 2014 and move to a 'hold' with a new target price of 798p vs. 848p," Shan said.N+1 Singer had rated the stock 'buy' in December 2014 when it said shares were "oversold" at the 720p level."With LFL's lacklustre (0.4% in FY15) and competition rising, the Spirit deal with £30m of associated synergies takes on more significance."While the combined entity of Greene King and Spirit will support higher growth, the analyst said investors will need evidence of more solid LFL metrics and double-digit earnings growth before the stock will re-rate.Shares were down 2.6%at 798.5p by 10:48.