JD Wetherspoon Plc

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JD Wetherspoon is a victim of its own success. It is coming under pressure to prove that it can continue with the excellent growth rate that has made...

JD Wetherspoon is a victim of its own success. It is coming under pressure to prove that it can continue with the excellent growth rate that has made it a star performer on the stock exchange for some time.

This month, analysts at broker Old Mutual Securities recommended that investors should sell their shares in the pub company.

This marks a shift in sentiment for the City, which - apart from warnings from Crédit Suisse First Boston - has always backed the company.

The brokers are asking whether Wetherspoon can achieve its target of opening 90 pubs a year without margins being hit.

Although they praise the management team's abilities, they believe Wetherspoon should perhaps look for corporate deals.

Wetherspoon chairman Tim Martin has reassured the City that there are no risks with the expansion plans, which are backed by a continuing drive to improve quality.

Its share price sunk in March from 418p to 338p after it revealed that like-for-like sales growth slowed to 3.1 per cent in February.

This was due to the introduction of promotions, such as cut-price coffee, but by April growth was back up to 8.7 per cent, nudging shares to 397p.

Following Old Mutual's switch to a "sell" recommendation, the price declined last week to 367p.

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