Shore Capital sees big upside at Fuller, Smith & Turner after FY beat

(Sharecast News) - Shore Capital has reiterated its 'buy' rating on Fuller, Smith & Turner following last week's results from the pub group, saying that the company's growth potential isn't reflected in the current share price. Results for the 12 months to 28 March released on 10 June showed a 5.7% increase in revenues, with all parts of the business performing well and delivering positive like-for-like sales growth, while adjusted pre-tax profit jumped 28% year-on-year.

Figures were ahead of market estimates, leading to Shore Capital to raise its FY27 earnings per share forecasts by 6%, representing 11% year-on-year growth, adding that there is scope for further upside going forward.

"LFL growth the starter, further margin opportunity for main course and capital deployment the dessert. We expect these three courses to leave investors well sated with double-digit annual EPS growth, which is yet to be fully factored into market estimates, along with building asset value," the broker said in a research note.

FSTA shares surged following the results, rising 14% on the day of the release to 748p, but have since erased some of those gains, finishing Tuesday's session at 682p.

"Despite the well merited subsequent pop in the share price on the results day, we believe this opportunity is yet to be reflected in the current valuation, and continue to see a roadmap to over 1,100p per share on a two-year view," Shore Capital said.

The stock was 2.4% higher at 698p by 1011 BST.