Mitchells & Butlers Shares Gain as Deutsche Bank Upgrades to Buy

Mitchells & Butlers shares (LON:MAB) climbed 3.84% to 284p this morning following a rating upgrade from Deutsche Bank, which shifted its stance on the pub and restaurant operator from Hold to Buy.

Analyst Tim Barrett also raised the price target to 325p from 300p, citing a favourable shift in market dynamics that positions the asset-backed hospitality group as an attractive investment opportunity.

The upgrade reflects broader market rotation away from AI-exposed sectors toward companies with substantial tangible assets. Deutsche Bank believes this trend creates a compelling entry point for Mitchells & Butlers, whose extensive property portfolio provides a solid foundation of value. The firm's confidence in the stock comes as markets increasingly favour stability over the volatility associated with technology-focused investments.

The positive sentiment surrounding Mitchells & Butlers extends beyond analyst upgrades. The company recently reported robust financial results for the fiscal year ending September 27, 2025, with revenues reaching £2.71 billion, representing a 3.9% increase year-on-year. Adjusted operating profit rose 5.8% to £330 million, whilst profit before tax climbed 17% to £246 million. Like-for-like sales advanced 4.3%, outperforming the broader market by approximately three percentage points, demonstrating the group's ability to capture market share in a challenging trading environment.

These operational achievements have not gone unnoticed by the analyst community. Jefferies highlighted Mitchells & Butlers as well-positioned to gain further market share in a cost-pressured sector, pointing to its scale advantages, largely freehold estate, and diverse brand portfolio. The brokerage also noted that leverage has fallen to 1.8 times, providing the company with increased financial flexibility as debt levels decline.

Price Targets

However, significant headwinds remain on the horizon. Mitchells & Butlers faces approximately £130 million in additional costs during the current fiscal year, driven primarily by minimum wage increases and rising food prices, particularly for meat products. These cost pressures represent a material challenge to margin expansion and will test management's ability to execute disciplined operational strategies.

Despite these concerns, the company has expressed confidence in navigating the inflationary environment through effective cost management and strategic initiatives. The combination of strong like-for-like sales growth, market share gains, and a substantial asset base provides a buffer against near-term margin compression.

The stock's performance today suggests markets are weighing the company's operational resilience and asset backing more heavily than immediate cost pressures. With Deutsche Bank's upgraded price target implying potential upside of approximately 14% from current levels, and the company's demonstrated ability to outperform the market, Mitchells & Butlers appears to be benefiting from renewed investor interest in value-oriented, asset-rich businesses.