BEST OF THE BROKERS

DIAGEO
UBS has reiterated its “buy” rating on the drinks company and upped its target price from 1,600p to 1,700p, saying that M&A is now firmly on the agenda after the company reduced its net debt ratio. The broker expects Diageo to continue to focus on local emerging market deal in Latin America, China, India and Africa, as well as on products to fill gaps in its portfolio, including bourbon and tequila. Jose Cuervo is a potential target that UBS sees as strategically positive, with growth potential in the US.

LUFTHANSA
JP Morgan Cazenove has upgraded the German flag carrier from “neutral” to “overweight” due to its exposure to premium traffic and the recent sale of BMI. The broker also says that the expansion of capacity at Frankfurt is unlikely to be an issue in 2012, as there is no sign at the moment of EasyJet opening a new base there this summer.

OPHIR ENERGY
Nomura has increased its target price on the international oil and gas exploration company from 525p to 667p and retained a “buy” rating on the stock following a record gas discovery in Tanzania. The company said on Monday that the Jodari-1 well was a 4.5 trillion cubic feet discovery, significantly higher that pre-drill estimates had suggested. The broker expects the market to now fully derisk a two-train LNG development, and apply an M&A read-across valuation from the sale of peer Cove.