BEST OF THE BROKERS

JD WETHERSPOON

UBS rates the pub chain a “buy” but has reduced its target price to 500p from 525p. The broker points to a one-off increase in spending on staff and repairs that are depressing margins, but adds that earlier opening hours will increase group margins above the firm’s historic 10 per cent trend as soon as 2012.

LANCASHIRE

Shore Capital rates the insurer a “buy” with a target price of 580p. Shore notes underwriting and capital discipline in the firm’s recent quarterly results, with a robust balance sheet and debt gearing of just over eight per cent. The broker adds that the firm’s special dividend alone represents a 15 per cent yield.

RANDALL & QUILTER

Numis rates the insurance firm a “buy” with a target price of 140p. The broker sees the firm’s recent agreement with the Lloyd’s market to form a syndicate next year as a positive step, which will diversify the company. The broker believes the deal could support a higher price to earnings ratio, which now stands at 8.7 times.