Overview
Stifel’s analysts have singled out the UK pubs sector as one of the market’s most undervalued segments as investors move into 2026. Despite subdued investor sentiment and macroeconomic pressures prevailing through 2025, the brokerage places two operators - Young & Co’s Brewery and Fuller Smith & Turner - on its Top Picks list for 2026, assigning both stocks Buy ratings.
Why the sector and names stood out
According to Stifel, the appeal lies in a combination of defensive characteristics, premium positioning and meaningful real-estate backing. Those attributes underpin the analysts’ conviction that these operators can deliver more resilient trading and improved earnings outcomes as market conditions normalise and investor confidence returns.
Young & Co’s Brewery - Buy, 1,450p
Stifel highlights Young’s operational momentum entering 2026 following a strong first half. The firm notes leading like-for-like sales growth and industry-best margins for the company. Young’s focus on premium pub estates concentrated in affluent London and South-East locations is cited as a structural advantage, supporting both pricing power and more resilient visit volumes.
Forward bookings into the Christmas period were reported to be up sharply, which Stifel reads as a sign of renewed consumer willingness to spend on premium, experiential venues. The integration of the City Pub Group assets is also referenced as contributing to cost synergies and operational efficiencies, providing incremental support to earnings.
Stifel assesses Young’s as structurally positioned to outperform broader hospitality names on the back of a high-quality freehold estate, disciplined capital allocation and the ongoing attractiveness of premium pub formats. The analysts see scope for rating upgrades during 2026 as trading continues to normalise, macro pressures ease and margin strength converts into accelerating EPS growth. With the stock trading below its long-term EV/EBITDA averages, Stifel expects a gradual re-rating back toward historical levels as investor confidence improves.
Fuller Smith & Turner - Buy, 750p
Fuller’s is described by Stifel as finishing 2025 with stronger momentum than many peers, buoyed by interim results that showed notable margin expansion and double-digit earnings growth. The company’s premium strategy, supported by a balanced estate that includes high-footfall London sites and destination food-led pubs, is seen as offering resilience to swings in consumer spending.
Stifel points to a meaningful improvement in Christmas trading expectations and early signs that cost pressures are stabilising as creating a favourable backdrop entering 2026. The analysts characterise Fuller’s as a high-quality defensive operator able to generate consistent growth even in softer macro conditions, backed by a real-estate-rich balance sheet, a freehold bias and disciplined management.
The brokerage also notes catalysts that could lift sentiment, including a renewed buyback programme and ongoing operational improvements. Although Fuller’s delivered a strong Q4 share price performance, Stifel observes the stock still trades well below its long-term multiples, leaving scope for further revaluation as trading updates continue to reassure the market.
Analysts’ expectations and market implications
Overall, Stifel’s view is that both Young’s and Fuller’s combine defensiveness, premium positioning and real-estate backing in a way that merits Buy ratings and inclusion among its Top Picks for 2026. The analysts foresee potential for upgrades and valuation re-ratings as trading normalises, margins firm and earnings growth accelerates. The brokerage’s stance reflects a belief that investor sentiment can lag operational recovery, creating opportunities where fundamentals have already improved.
Note: The article summarises Stifel analyst views and reported company performance indicators as presented by the brokerage.