Share price weakness at posh cakes and casual dining chain Patisserie (CAKE:AIM) is a buying opportunity ahead of interim results on 18 May.

The group, which owns Patisserie Valerie, Baker & Spice and sandwich shop Druckers, has fallen 17% to 340p so far this year as a result of weak leisure sector sentiment caused by Restaurant Group’s (RTN) profit warning in January.

Unlike other leisure stocks such as Merlin Entertainments (MERL), Patisserie has yet to recover from the dip, which we think
is unwarranted.

We think the drop could start to reverse when Patisserie reports first half results next week. The £342 million cap is forecast to produce an adjusted pre-tax profit of £8.2 million, a year-on-year rise of 17%.

The growth is being driven by successful initiatives like afternoon tea and its ongoing roll-out programme, which is all funded from operating cash flow. Patisserie opened 12 branches in the first half, putting it well on track to meet its full-year target of 20 new stores.

So far the roll-out has focused on core brand Patisserie Valerie, but the group is now expanding premium bakery and cafe Baker & Spice as well. It opened a Baker & Spice in Brighton - its first outside London - in April.

Canaccord Genuity says wage pressure is as expected and the benign food cost environment is providing some offset.

High growth potential and a strong balance sheet make a tasty investment at 340p.