Broker tips: Fuller, Smith & Turner, Fresnillo, ITV

Peel Hunt upgraded its recommendation on Fuller, Smith & Turner on Friday and lifted the price target to 1,250p from 1,150p after the company agreed to sell its entire 200-year old brewery business to Japan's Asahi for an enterprise value of £250m.

"For Fuller’s, the result is clear: this transformative deal provides the foundation for many years of strong growth, hence we are moving our recommendation from 'add' to 'buy'."

The broker said the price, which represents 23.6x EBITDA, is a good transaction. "It had to be; the company was not going to undertake it lightly."

Peel said it has adjusted its forecasts, expecting this transaction initially to dilute FY profits by circa 10% from May. However, after returning £55-69m to shareholders, it expects net debt/EBITDA to drop below 1x, a position from which the pub estate should be able to grow rapidly.

"As the company has a small amount of expensive debentures, lower debt could increase the cost of debt in the short term, but this is not a concern. The company is likely to become more acquisitive, but without compromising on its disciplined acquisition criteria," the broker said.

Fuller's said earlier that it would net about £205m in cash from the sale.

Analysts at UBS upgraded Mexico-based precious metals mining company Fresnillo to 'buy' on Friday, noting the firm was "as inexpensive as it has been for a number of years".

UBS said Fresnillo was "well positioned" for re-rating in 2019 after the stabilisation of "several key risks", such as potential changes to Mexican mining policy.

The analysts felt that material changes to the nation's legislation now seem "materially lower" following recent statements from Mexican mining undersecretary Francisco Quiroga - who specifically stated there would be "no retroactive changes" to mining concessions and permits.

While Senator Napoleon Gomez Urrutia has called for higher mining taxation, on balance UBS believes Quiroga's comments were likely to reduce the risk of any changes there also/

UBS also noted that after more than two years of operational disappointments at the Fresnillo mine and several medium-term production guidance downgrades, in its view, market expectations for the firm were low.

"We do not expect a material improvement at the Fresnillo mine in FY19 and we believe labour availability could remain an issue in FY19; but after weak 4Q18 results and FY19 guidance, in our view expectations are low reducing the potential for further disappointment."

In addition to the upgrade, UBS also bumped its target price on Fresnillo from 900p to 1,100p.

Analysts at Societe Generale downgraded their recommendation for shares of ITV at the end of the week, from 'buy' to 'hold', setting a 138.0p target price in the process.

In a research note covering the Global Media & Internet sector, the French broker argued that pricing power for consumer facing companies remained "strong" when low price points were involved and when applied to a differentiated product proposition, such as Netflix.

As penetration rates leveled-off, there was also scope for a growing overlap between advertising and e-commerce, SocGen said, pointing to a $2.0trn-plus opportunity.

Soc Gen highlighted the fact that that was four times greater than the total global advertising spend and, it added, penetration levels were still low in many categories.

Nevertheless, in the case of ITV it chose to emphasise the renewed uncertainty that existed "driven by a protracted Brexit".