Compass Group PLC (LSE:CPG) has been served an upgrade from Deutsche Bank, which has shifted its rating on the contract caterer to 'buy' from 'hold'.
The broker also nudged its price target up to 2,900p from 2,700p, arguing that the group’s steady cash generation and resilience through the cycle deserve more recognition.
The shares rose 3% to 2,611p.
It is part of a broader look at the European hospitality sector, where shares have lagged the wider market this year. The Stoxx Travel & Leisure index is down 1.9% since January, against an 8.4% gain for the Stoxx 600.
Deutsche reckons the underperformance is overdone, especially for companies with reliable demand such as Compass, which supplies meals for workplaces, schools and hospitals.
Whitbread PLC (LSE:WTB), owner of Premier Inn, also makes the bank’s shortlist of top picks.
The shares carry a 'buy' rating and a 3,750p target. Analysts think Whitbread’s UK-focused hotel model gives it a defensive edge as business and leisure travel settles into a post-pandemic rhythm.
Among other London-listed stocks, Deutsche has 'buy' ratings on Jet2 PLC (AIM:JET2), the package holiday operator, with a target of 2,059p, and On the Beach Group (LSE:OTB), the online travel agent, at 320p. Tour operator Tui, which maintains a dual listing, is also rated Buy with an €11 target.
Not all the calls are bullish. Intercontinental Hotels Group PLC (LSE:IHG), owner of the Holiday Inn and Crowne Plaza chains, stays at 'hold' with a slightly higher target of 8,050p.
Dalata, the Irish hotel group with a London quote, remains in limbo pending takeover interest from Scandic and Pandox.
The overall message is that leisure travel remains attractive but patchy.
Tour operators such as Jet2 and Tui are seen as well placed to benefit from resilient demand, while the steadier names, Compass in catering, Whitbread in hotels, provide ballast for investors looking for dependable returns.