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On Friday, Stifel analysts upgraded Fuller Smith & Turner Plc. (FSTA:LN) stock from ’Hold’ to ’Buy’ and set a new price target of GBP7.50. The upgrade comes amid signs of resilience in the UK hospitality sector, despite concerns following the October 2024 budget. Analysts at Stifel noted that pub trading has shown robustness, with sales in April increasing by 9.1% compared to the same period last year, according to the CGA/RSM Hospitality Business Tracker.
The analysts highlighted that the improved spring weather and a rise in consumer cash flow have contributed to stronger trading within the sector. They anticipate that upcoming reports from Young’s and Fuller’s will deliver a positive message regarding volumes. Additionally, the firms are expected to discuss strategies to manage wage cost pressures through a combination of pricing and cost measures.
Fuller’s shares have rebounded from their lows but remain approximately 20% below the levels seen before the budget announcement. Stifel’s price target is based on a long-term average multiple of 9 times the 12-month forward EBITDA, indicating potential growth for the stock.
Investors are looking forward to the earnings reports from Young’s next week and Fuller’s the following week. These reports are expected to provide further insights into the performance and strategies of these companies in the current economic climate.
Stifel’s upgrade suggests confidence in Fuller Smith & Turner’s ability to navigate the headwinds facing the hospitality industry and to capitalize on the current market conditions. The new price target of GBP7.50 reflects this optimism and the firm’s assessment of the company’s financial prospects.
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