Newspaper article The Evening Standard (London, England)

Brokers Mixed over Drinks Sales Picture; Market Report

Newspaper article The Evening Standard (London, England)

Brokers Mixed over Drinks Sales Picture; Market Report

Article excerpt

Byline: MICHAEL CLARK

IT HARDLY counts as a barroom brawl, but brokers are at odds about the state of Britain's drinks industry.

On Friday, the entire drinks sector was floored by a shock profits warning from pubs chain JD Wetherspoon, up 11p at 1911/2p. Boss Tim Martin warned of a dramatic slowdown during the past few weeks that will leave profits for the year 10% below City expectations. US securities house Morgan Stanley responded today by lowering its price target for Wetherspoon from 450p to 300p to reflect the slowdown in the drinks sector. Rival UBS Warburg has also downgraded Luminar, 4p off at 451p, from strong buy to buy and slashed its target price from 840p to 660p.

But Merrill Lynch has been telling clients that Friday's sharp drop in share values of the pub operators and drinks suppliers has been overdone.

Analyst Ian Rennardson has been having some cosy chats with the likes of Whitbread, down 3p at 564p, and Punch Taverns, 41/2p better at 195p, where trading is described as "solid".

He has come to the conclusion that the drop-off in sales is not a national High Street problem but a London problem. He backs up his argument with a recent trading update from Six Continents, down 9p at 556p, which reports full-year results later this week. It said difficult trading conditions in London and a competitive High Street had offset a strong performance in the suburbs. Scottish & Newcastle, reporting tomorrow, slipped 1p to 450p, while Wolverhampton & Dudley, also reporting this week, was unmoved on 5561/2p.

Share prices generally made a steady start recording modest gains. In thin trading, the FTSE 100 rose 24.4 to 4193.8.

Anglo-Swedish drugs giant AstraZeneca slipped 13p to 2433p after US securities house Morgan Stanley downgraded the shares from overweight to equal weight. …

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