By Geoffrey Smith
Investing.com -- U.K. pub stocks came under renewed pressure on Monday after Irish stockbrokers Goodbody downgraded most of them, forecasting further weakness next year as the cost-of-living crisis eats further into disposable incomes.
Goodbody said that near-term trading is likely to be supported by demand linked to the World Cup (although that support will wane after England's exit from the competition at the weekend), and by the prospect of a Christmas and New Year holiday season free from COVID-19 restrictions.
But 2023 is set to be grim, its analysts warned, with higher labor costs and weak demand keeping profit margins below their pre-COVID levels.
The brokerage cut both J D Wetherspoon (LON:JDW) and Mitchells&Butlers (LON:MAB) to 'hold' from 'buy', while it left its recommendation for Marston's (LON:MARS) unchanged but cut its price target by over half to 43p. It said M&B earnings forecasts are likely to be cut by as much as 25%, while Wetherspoon's strong start to its new fiscal year is likely to fade as the consumer environment becomes "more challenging."
By 10:50 ET (15:50 GMT), Mitchells&Butlers was down 6.4% in response to its lowest in over five weeks, while Wetherspoon stock fell 1.8%, and Marston's fell 4.5%.