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(Sharecast News) - Analysts at Berenberg nudged their price target on Johnson Service Group down to 200p from 205p after trimming earnings forecasts on the back of a softer outlook for its hotel, restaurant and catering (HORECA) division, though they also noted that the recent shareprice reaction looked overdone.
Berenberg said Johnson Service had delivered resilient firsthalf results despite a tough backdrop for UK and Irish hospitality, with group revenue broadly flat at £258m, and margin gains across both HORECA and workwear helping drive 4% underlying earnings growth and 9% earning per share growth, the latter of which was supported by ongoing buybacks.
The German bank, which has a 'buy' rating on the stock, said workwear continued to perform well, with organic revenue up 2.6% to £74m and customer retention steady at 94%. HORECA revenue dipped 0.8%, reflecting weaker hospitality spending, though both divisions posted margin improvements of 30 to 60 basis points.
Berenberg said HORECA's seasonal uplift over the summer had been "more modest than anticipated", and that it now expects softer trading to persist through the rest of FY26. Even so, it also said productivity gains and flexible cost management should help protect profitability, while workwear was expected to remain solid. JSG remains on track to deliver its 14% EBIT margin target for the year.
As a result of the weaker H2 outlook, the broker trimmed its HORECA forecasts and reduced group EPS estimates by 1% to 2% across its forecast period, but said the 7% shareprice drop on results day looked excessive given the modest changes, noting JSG still trades on "attractive" multiples, with 14% EPS growth expected in FY26.
Reporting by Iain Gilbert at Sharecast.com
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