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Running the rule over the upper echelons of the market, Panmure has upgraded Alliance & Leicester from sell to hold, believing the FTSE 100 giant to be ‘the most likely candidate for a takeover’ among UK banks. Over in media, ‘Emap looks attractively valued at current levels’ and is worth buying, while it is a good time to book profits at retail giant Kingfisher, owner of the B&Q and Screwfix brands. A leisure sector pick is the ‘more modestly valued’ bookmaker William Hill; Panmure prefers it to peer Ladbrokes, which is one to sell.

Amid the small caps, analyst Nick James has churned through the accounts at cash-rich nCipher, the market-leading supplier of IT encryption to global corporate bodies. Despite the distraction of a possible takeover by a US rival last year (vetoed by the Office of Fair Trading), nCipher still managed to deliver 21 per cent revenue growth last year. Although sales from recent acquisition Abridean were ‘disappointing’, the group is now generating cash and plans to return £34 million to shareholders, while using the rest for internal investment in R&D and staff. ‘Once visibility on 2008 emerges, there is some upside,’ James adds, urging investors to hold onto their shares.

Meanwhile on AIM, Oliver Wynn-James has increased his target price on £120 million air conditioning contractor Worthington Nicholls following the group’s move into the hotel facilities management market through a major international contract. ‘With low capital outlay, Worthington Nicholls has opened up a large addressable market with diverse revenue opportunities. Over time we expect the offering to be rolled out to other branded chains, therefore raising the probability of further incremental hikes to the target price.’ Needless to say, he maintains his buy stance.