Broker tips: JD Wetherspoons, Synthomer, Kingfisher
By Iain Gilbert
Date: Friday 24 Oct 2025
(Sharecast News) - Peel Hunt reiterated its 'hold' rating on JD Wetherspoon despite an improving opinion about the stock's valuation, saying that the upcoming Budget could limit upside in the near term.
Ahead of Wetherspoons' first-quarter trading statement on 5 November, Peel Hunt highlighted the worse-than-expected sales update given at full-year results, after the company reported that like-for-like sales growth had slowed to just 3.2% over the first nine weeks of the financial year, from 5.1% in the fourth quarter.
At the end of September, Peel Hunt, which already stood 1% below consensus forecasts, expected full-year LFL sales to increase by 4.5%. Looking ahead, however, it said November's Budget was likely to be a focus for the company and its shareholders, given that last year's Budget increased labour costs for the firm by £60m per annum from April 2025 and non-commodity energy costs by £7m per annum from October.
According to Peel Hunt which has a 700p target price on the stock, Wetherspoon is heavily exposed to any potential increases in tax rates, since its pre-tax profit margin remains slim at below 4%. One potential change could come by way of an increase to machine gaming duty, which if lifted to 50% from 20% as rumoured would cost the company £27m per annum, he said.
Peel Hunt also noted that despite a valuation that has "started to look attractive" - trading at an EV/EBITDA multiple of 7.1 - the upcoming Budget "offers too much uncertainty to buy the shares now".
Analysts at Berenberg lowered their target price on chemicals firm Synthomer from 80p to 60p on Friday, stating weak demand continues to weigh on "the slice of equity value" left in the stock.
Berenberg said Synthomer's qualitative third-quarter trading update "held few surprises" in this respect, with the stock's 23% share price decline over the past month suggesting market anticipation of the trim in full-year continuing operations FY25 underlying earnings guidance from slight growth versus the 2024 level of £143m.
The German bank noted that demand for and pricing of industrial chemicals has been weak in September and October, with the second half EBITDA deceleration implied by Synthomer's new guidance of £65m, leaving earnings growth "potentially challenging" in 2026, notwithstanding £25m of cost savings and usual seasonality.
Berenberg, which reiterated its 'hold' rating on the stock, said the roughly 5%/8%/10% reductions to its EBITDA forecasts for 2025/26/27 primarily reflected weaker net prices and volumes across the business, especially in coatings, energy and nitrile latex.
"Synthomer trades at the lower end of the diversified chemicals sector, at 4.4x 2026 EV/EBITDA; we believe this is a fair reflection of the risks associated with its elevated leverage. Please note: our year-end leverage calculations exclude receivables factoring, which would add GBP114m as at H1 2025," said Berenberg.
B&Q and Castorama owner Kingfisher rallied on Friday after RBC Capital Markets upgraded the stock to 'outperform' from 'sector perform' and lifted its price target on the stock to 350p from 320p.
"Our store potential analysis suggests further space growth opportunities for KGF in the UK and Poland, with likely further strong trade and ecom growth," it said. "We are positive on its gross margin outlook, while Poland recovery should offset a tough French market. 12x CY26e price-to-earnings looks undemanding given KGF's strong EPS growth and cash returns."
RBC said that in collaboration with its data science team, RBC Elements, it has undertaken a store potential analysis for each of Kingfisher's three key markets - the UK, France and Poland - using geospatial and demographics analytics.
"This suggests there is still a significant white space opportunity for KGF, particularly for infill locations in the UK and Poland, while in France we expect Kingfisher to focus on restructuring the store network, improving operating efficiency and growing online sales," it said. "Including adjacent categories KGF believes its total addressable market is £160bn, compared to its sales of circa £13bn. Every 1pp addition to our long-term sales CAGR of +1.5% would add circa 25p to our DCF value of 340p."
The Canadian bank said Kingfisher will face tough comps in 2026 from Q1 seasonal strength and Homebase share gains, but it expects that its core DIY trading will be resilient, given that it's a way for consumers to save money.
RBC added that its price target increase was due to higher long-term profit assumptions and a recent re-rating of peers.
"KGF trades at 12x CY26E P/E, in the middle of its historical range and should offer low double-digit EPS growth and a 4% dividend yield," it said.
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