Mitchells & Butlers: Risk Reward Update

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Mitchells & Butlers: Risk Reward Update

UpdateM

RiskRisk RewardReward– Mitchells- Mitchells& Butlers (MAB.L)& Butlers (MAB.L)

Risk reward looks favourable, but uncertain UK outlook keeps us on the sidelines

PRICE TARGET 330p EQUAL-WEIGHT THESIS

Our price target is based on the average of 10x P/E and 7x EV/EBITDA for FY26e, in-line with ▪Well-located and larger than average large

its pre Covid average, arguably conservative given the company's stronger competitive pubs mostly run under popular brands and

position and balance sheet. formats

creates an attractively positioned 356p ▪This

estate in an industry under structural

Consensus Price Target Distribution 325.00p 390.00p decline MS PT

track record of LfL salesSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪Good

outperformance

▪Excellent record of cost control, though

margins have still been under structural

RISK REWARD CHART decline

▪A freehold-skewed estate with NAV nearly

GBp double the current share price

balance sheet, ongoing deleverage 490p490p(+78.18%)490p(+78.18%)(+78.18%) ▪Strong

creates opportunities for M&A or cash

480 returns

▪However the company prefers to use its

FCF to delever rather than reward

360 shareholders

330p330p(+20.00%)330p(+20.00%)(+20.00%)

275p275p275p

240 Consensus Rating Distribution

80% Overweight

190p190p(-30.91%)190p(-30.91%)(-30.91%) 20% Equal-weight 120

0% Underweight

MS Rating

JUL '25 JAN '26 JUL '26 JUL '27 Source: Refinitiv, Morgan Stanley Research

Key: Historical Stock Performance Current Stock Price Price Target

Risk Reward Themes

Source: Refinitiv, Morgan Stanley Research

Self-help: Positive

Special Situation: Positive

View descriptions of Risk Rewards Themes here

BULL CASE 490p BASE CASE 330p BEAR CASE 190p