Basically, the Goldman analyst argues Martson's is slightly stuck between a rock and hard place because it needs to throw money at its pubs to reposition its estate into larger food-led outlets but can't do this as it also needs to "de-lever" its balance sheet.
Below is the key comment from the stockbroker's equity research analyst:
So, I wonder what Marston's might do next to get round the above issues? Watching...
We highlight three reasons to Sell Marston’s: 1) It faces ongoing structural pressure given its wet-led focused pub estate and so requires capital investment to drive growth, both to reposition its estate towards larger food-led pubs and to maintain existing smaller wet-led pubs. 2) This capex limits Marston’s ability to de-lever its balance sheet (2013 net debt/EBITDA: 5.8x), or to generate any positive free cash flow. We expect FCF (incl. new-builds) to remain negative to 2018E. 3) Its valuation is demanding vs. both growth and peers on our estimates. Our new 12-month price target of 114p implies 19% potential downside; reiterate CL-Sell.