City broker Panmure Gordon is warning that Enterprise Inns faces an uphill struggle to restore profits in the coming year.
Enterprise is due to publish its annual results next Tuesday (November 17) and Panmure's Simon French does not believe the numbers will make for happy reading.
In a pre-results note French, who has Enterprise shares down as a 'sell', says he expects the pubco's full year pre-tax profits to fall by 21 per cent to £208.7m.
French warns that Enterprise is unlikely to be able to recoup declining beer volumes through price hikes, while rental income is likely to continue falling year-on-year given the current negative RPI and rent-setting guidance from RICS.
"It is difficult to see how Enterprise Inn will be able to grow income from its core estate over the medium term," French wrote.
The analyst acknowledged that Enterprise had made progress on cutting debt through disposals, but warned a refinancing, while likely, was not guaranteed and raising equity "cannot be ruled out".
Elsewhere in the Square Mile Douglas Jack, of Numis Securities, believed Enterprise's profits would fall 20 per cent to around £210m, but said there were "signs of stabilisation" for the pubco, and the "eventual return of inflation and higher interest rates should be good for the shares".
However he believed Punch Taverns "offered greater value and potential upside from improving asset quality and debt reduction".
Geof Collyer of Deutsche Bank also believed trading had stabilised and rated Enterprise Inns' shares as a 'buy'.
But he said he wants next week's results presentation to include "a detailed breakdown of the profile of the additional support going into the estate...progress on asset disposals and the reduction in bottom pubs in trouble, and an update on the regulatory position, now that the industry has moved to address most of the BEC report's issues".
Enterprise's shares were up 2.9p at 130p.