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Broker tips: Halfords, Fevertree Drinks, Easyjet
Canaccord Genuity upped its stance on Halfords to 'buy' from 'hold' on Friday, lifting the price target to 436p from 370p following the company's third-quarter update a day earlier.
The brokerage said that after six years of not really going anywhere, FY19 should see a return to positive momentum, with earnings per share growth of 14%, followed by 10% in FY20 and risks to the upside.
"We take heart from Halfords' ability to drive Q3 like-for-like volume growth in bikes even as its prices go up 6-7% (versus the market up 10-15% and down on volumes). We think that this dynamic should lead to margin expansion in FY19E and beyond, even taking account of product mix."
Fevertree Drinks is in a "unique" position to capitalise on the 'premiumisation' or 'gin-naissance' trends in the drink industry, analysts believe, leading to rumours on Friday that the company may be a takeover target.
Jefferies, on Friday began coverage of the upmarket mixers maker with a 3,000p target price and a 'buy' recommendation, said the company was a "unique asset that offers a leveraged play on premiumisation trends in spirits in a sub-category where there is a disconnect between premium spirits and mixers".
The structural driver of the consumer trend towards more 'premium' spirits sees people seeking to drink 'better not more' and prepared to pay a premium for high-quality brands.
EasyJet looks ready to reap the benefits of its moves to expand its short-haul flight business, as its acquisition of recently collapsed carrier Air Berlin's operations at Tegel Airport set up the British firm to take the title of Germany's leading airline.
Analysts at Morgan Stanley upgraded the investment bank's rating on EasyJet to 'overweight' from 'equal-weight' on Friday, raising the low-cost carrier's target price to 1,725p from 1,490p in the process, and tapped it as one of its preferred stocks for the year, along with competitor Ryanair.
"As the best-hedged name in the sector for 2018, combined with leverage benefits from the Air Berlin slots in Germany, we believe pricing momentum can gradually improve," said Morgan Stanley.