JPMorgan upgrades Mitchells & Butlers to 'overweight'

29th Jan 2016 09:13

(ShareCast News) - JPMorgan Cazenove upgraded Mitchells & Butlers to 'overweight' from 'neutral' following the company's first quarter trading update.The bank said while trading conditions remain tough, M&B's AGM update showed an improvement in the trajectory of like-for-like sales growth and operating margins.It said LFL sales growth continued to be negative in the nine weeks since M&B last reported - down 0.6% - but pointed out this is still an improved from the 1.6% drop in the first eight weeks of the year.In addition, the bank noted the sharp drop in the shares, which are down nearly 20% since the full year results in late November and said the stock is trading at an "excessive discount" to the sector at current levels.JPMorgan kept its earnings estimate unchanged at £334m FY2016E operating profit, but cut the target price on the stock to 370p from 420p.At 0923 GMT, Mitchells & Butlers shares were up 0.9% to 290.90p.