Broker Numis said its key picks for 2012 are Dominos Pizza (LON:DOM), Marstons (LON:MARS), and Spirit Pub Company (LON:SPRT) in a note today.
In the quoted managed pub/ restaurant sector, like-for-like sales are currently growing at an average of 3.1 per cent, analyst Douglas Jack said in a note.
"However, most operators have been unwilling to fully pass their higher costs on to customers," said the analyst.
Jack said that only those three firms (above) had been able to combine LFL sales and margin growth during the latest reported half year.
Helped along by eating out growing, trading has been resilient in 2011, said the analyst, noting that the broker had upgraded forecasts for more stocks than it had downgraded.
For 2012 estimates, Numis forecasts allow for average LFL sales slowing to 1.5 per cent, from 3.5 per cent, added the analyst.
Running through its key picks, the broker is increasing its price target to 60 pence from 50 pence on Enterprise Inns (LON:ETI), which it rates a 'buy'.
For Mitchells & Butlers (LON:MAB), rated 'add', the price target increases to 260 pence from 250 pence, while The Restaurant Group is downgraded to hold from add with a target price cut to 310p, from 340p, to reflect increasing competition as well as much tough LFL and margin prospects in 2012E.
Prezzo (LON:PRZ) (Add) had its price target cut to 65p, from 70p, ahead of greater cost and margin pressure in 2012E while Numis has a 'reduce' rating on JD Wetherspoon (LON:JDW)with a target price of 375 pence.
"We would continue to avoid JD Wetherspoon owing to its above-average exposure to higher costs, declining high street footfall, increasing competition and machine duty change," said the broker.