Broker tips: Entertainment One, Spire Healthcare, Mitchells & Butlers

Berenberg downgraded its stance on Peppa Pig owner Entertainment One to 'hold' from 'buy' on Monday as it lifted the price target to 572p from 475p to account for a 20% chance of a potential "left field" counterbid to Hasbro at 10% above the current price.

US toy company Hasbro agreed to buy ETO for £3.3bn last month.

Berenberg said in a note that Entertainment One is a logical takeover candidate for many players.

"In a world where many deep-pocketed tech giants are working to understand how they can captivate audiences by producing the very best content, we believe Entertainment One appears quite attractive given its modest size (a library valuation of £2bn) and a diverse portfolio of children’s brands, films, TV series and music.

"That said, we think there is no urgent need for any other players to own Entertainment One."

RBC Capital Markets initiated coverage of shares of private healthcare provider Spire Healthcare at 'outperform' with a 149p price target on Monday, ahead of the company's first-half results next week.

The bank said its analysis of recent NHS activity data, including new specialism level metrics, indicates that the high-margin orthopaedics segment has driven a strong acceleration in NHS revenues, which it expects to result in a positive surprise in H1 2019.

"We would buy into the results on 16 Sept," it said.

RBC noted that Spire's orthopaedic referrals have been up an average of 16-20% since December 2018, driving high-teens/ low-20s total

Britain's pub industry is immature, but with demand still there and capacity withdrawing at an accelerated pace, Mitchells & Butlers was set to cash in, said analysts at Morgan Stanley.

Against that backdrop, the sector finished August sporting a 1.2% rise in like-for-like sales on a trailing 12 months basis - its best showing in three years - and M&B had put in a gain of 3.6% up until July - also its best performance for three years.

That outperformance was set to narrow, but would be sustained, Morgan Stanley said, projecting a 2.0% increase in LFLs from 2020 onwards.

And its "intense" efficiencies were serving to offset the "significant" cost pressures in the market, leading the analysts to project a compound annual rate of growth of 3.0% for the firm's earnings before interest, taxes, depreciation and amortisation and of 9.0% for its earnings per share given its rapid deleveraging.