Fuller's urged to buy more pubs

Numis believes that Fuller's - which makes beers including London Pride, ESB and Honey Dew - will "comfortably" hit its pre-tax profit forecast of 28 million when it reports full-year results on Friday.

But the broker warned that the chain will have to increase its pubs estate from the present 360, which are centred around London and the south-east of England but also include bars in the West Midlands, Dorset and Somerset.

In April, Fuller's snapped up the 500-year-old White Swan Hotel in Stratford-upon-Avon from Pebble Hotels, taking its total number of hotels to eight, on top of its 16 Fuller's Inns with bedrooms.

Numis analyst Douglas Jack said: "We view Fuller's as one of the highest-quality pub operators - based on estate, brand, management and balance sheet strength - worthy of its premium rating.

"We believe the risk to forecasts remains on the upside, but substantial share price outperformance requires the company to utilise its strong excess cash inflow to make acquisitions if the right deals become available."

Fuller's owns the Griffin brewery in Chiswick and claims to be "London's last remaining traditional family brewer".

The company's pubs are split almost equally between managed pubs, which are run by the group itself, and tenanted outlets that are owned by their landlords but carry Fuller's name and beers.

Numis said that Fuller's tenanted estate has "an above-average orientation to food", which should help to support the pubs' ongoing performance, along with increased investment in licensee training and central purchasing.

Offering food to customers has become more and more important for pubs following the introduction of smoking bans in all parts of the UK.

The house broker noted that Fuller's had locked in its food and utility costs until spring 2012, which should help to keep its margins up.