Broker tips: JD Wetherspoons, S&U, Unilever

(Sharecast News) - Peel Hunt upgraded its stance on pub group JD Wetherspoon to 'add' from 'hold' on Tuesday following recent share price weakness. The broker said it was cutting its 2026 pre-tax profit estimate by 12% to reflect a shortfall in gross profit in the first half, not offsetting higher repair costs in particular. It also noted that like-for-like sales were up 4.8% in the first half but pre-tax profit fell by £10m to £22m.

"The bulk of this year's incremental costs fell in H1 but this was not matched with price increases," the broker said.

"According to CGA by NIC, JDW's average drinks price discount to the sector rose to 35% in December. Given JDW's investment in site, product range and service, we believe this 35% discount understates the gap in value for money, giving JDW the pricing power (despite the off-trade competition) to raise prices sufficiently to generate profit growth against a backdrop of lower increases in taxation from April 2026."

Peel Hunt said that due to an easing in labour cost pressures and increasing pricing firepower, it was retaining its 750p price target - assuming Wetherspoon's holds its 7.7x EBITDA rating over the next year.

Analysts at Berenberg lowered their target price on motor finance and bridging lender S&U from 2,350p to 2,200p on Tuesday following the group's FY26 results.

Berenberg said the results showed S&U's loan book had been rebuilt, driven by its Advantage business, while its Aspen unit also continued to grow.

The German bank noted that wile revenues were soft, so were impairments, meaning pre-tax profits were in line with consensus estimates.

In terms of outlook, Berenberg expects S&U to see "a strong rebound in lending" as the firm returns to serving its traditional customers following a period of regulatory uncertainty.

"While this reduces our EPS estimate by c10% for FY27, our numbers are top of the range, and we would expect a smaller cut to consensus," said Berenberg, which reiterated its 'hold' rating on the stock.

Berenberg added that although finance costs also increase in outer years, S&U was also engaged in a major securitisation project, which it reckons should enjoy better terms than the firm's current revolving credit facility.

RBC Capital Markets upgraded Unilever on Tuesday to 'sector perform' from 'underperform' as it said its reservations about the disposal of the food business were fairly reflected in the current share price.

The Canadian bank said that while it's "certainly not blown away" by the disposal of the food business as it will result in a minimal control premium, a convoluted structure leaving shareholders holding shares they didn't sign up for and management distraction, these reservations were fairly reflected in the share price.

RBC said it wasn't sure the move was worth the disruption as it estimated that Unilever will end up with a relative market share across its portfolio of 130.

"We sympathise, but feel that proposed changes to Unilever's remuneration policy raise questions," it said. "For instance, there's no stipulation for organic volume growth (compared with guidance of 2%), and the annual bonus and PSP start paying out for sales growth well below the 4-6% Unilever aspires to."

RBC noted that with consensus forecasts at the bottom end of 4-6%, and volume growth "fractionally" in excess of 2%, it could be argued that both investors and Unilever's remuneration committee were starting to agree that the firm's guidance was optimistic.

RBC also pointed out that consensus forecasts were at the bottom end of the guidance range for volume and sales growth, and its forecasts were below that. It noted that consensus expectations already reflect caution about the growth trajectory, while its sub-consensus forecasts yield an unchanged price target of 4,200p.