It has been a tough six months for backers of The Restaurant Group in the run-up to and following its £550million acquisition of Wagamama.
Worries over the strain the deal may have placed on the balance sheet have driven the share price down 100p, or 46 per cent.
But as Mark Irvine-Fortescue at City broker Stifel pointed out, transformational bolt-ons such as Wagamama rarely come along at the perfect time, or, indeed, at the ideal price.
He reckons the shares will recover, but this relies on a hiccup-free welding together of the popular noodle chain to TRG's existing Frankie & Benny's and Chiquito operation, as well as realising the planned synergies from the merger.
The Restaurant Group paid £550m for noodle chain Wagamama driving the share price down 100p, or 46 per cent
Irvine-Fortescue is a fan of the 'oversold' stock, which he reckons is worth 170p. Yesterday it was off another 2.1 per cent, or 2.5p, at 115.4p.
The Stifel abacus rattler, newly installed at the broker, took a closer look at TRG as part of a deep dive into the hospitality sector.
He also likes pub groups Fuller, Smith & Turner (off 0.9 per cent, or 10p, at 1135p) and Young & Co (down 2 per cent, or 32.5p, at 1610p), believing them to be more than 'sleepy family businesses'.
'With market caps similar to Marston's, and a supportive industry backdrop, we believe they should be on more investors' radar,' the analyst said.
Stock Watch - iEnergizer
Shares in outsourcing specialist iEnergizer soared 22.5 per cent, or 27.5p, to 150p after it said it expected operating profits to be ‘significantly’ ahead of market expectations.
It performed strongly in the second half of its year as it focused on higher-margin work from both existing and new clients.
The firm specialises in building contact centres and administration hubs in the healthcare, gaming and publishing industries, and manages a 12,000-strong team.
Wetherspoon, down 2 per cent, or 27p, at 1293p, is rated a 'sell' by Irvine-Fortescue, as it is 'now trading at its peak valuation'.
Turning to the wider market, it was a fairly dour day as the FTSE 100 succumbed to the same jitters that haunted Asia's main markets earlier on – namely, fears over global growth with a soupcon of the Brexit collywobbles for good measure. The index of blue-chip shares ended the session 30.01 points lower at 7177.58.
Goldman Sachs yesterday issued its update on its equity strategy. In this dense 16-pager, it pointed out that in the aftermath of the global financial crisis, returns had been 'flat and skinny'.
A quick scan reveals publisher Pearson (off 2.8 per cent, or 23.4p, at 825.8p) is top of the dividend charts along with Russia-focused Evraz (up 0.1 per cent, or 0.4p, at 594.8p).
Possibly offering a more sustainable income stream are the likes of Vodafone (down 1.8 per cent, or 2.58p, at 141.68p), BHP (up 1 per cent, or 12.4p, at 1772.6p), Aviva (up 0.2 per cent, or 0.9p, at 409p), HSBC (up 0.2 per cent, or 1.2p, at 614.2p) and British American Tobacco (off 0.4 per cent, or 13p, at 3073.5p).
Elsewhere, shares in Wood Group tumbled 7.6 per cent, or 41.6p, to 504p after the London arm of the American investment bank Jefferies downgraded stock in the oilfield services specialist to 'underperform', describing last week's prelims as below par and 'messy'.
There wasn't too much cheer among the tiddlers, as kiosk and display group Space And People tumbled 17.2 per cent, or 2.5p, to 12p after it reduced its full-year dividend for 2018 by two-thirds on the back of disappointing results.
Among the risers, Pantheon Resources was a big climber after a test at its Alkaid well in Alaska recorded results ahead of expectations, sending shares gushing up 34.6 per cent, or 5.96p, to 23.2p.
There was also good news as Ovoca Bio confirmed its BP-101 treatment for hypoactive sexual desire disorder in premenopausal women had met its primary and secondary endpoints in a phase 3 clinical trial, with shares jumping 3.7 per cent, or 0.25p, to 7p in response.