The acquisition of 11 Paramount restaurants by Prezzo, the listed fast-casual operator, for £3.1m was done at a good price and was consistent with the company’s long-term strategy, according to a City analyst. Nigel Parson, at Evolution Securities, has reiterated his buy recommendation of the stock – and upgraded his target price from 55p to 60p. In a note entitled “Patience is rewarded”, Parson said the deal would be earnings and value enhancing by FY11. As a result the analyst increased his EPS forecasts by 7.5% for FY11 and by 7% for FY12. He said: “The 11 restaurants have been hand-picked from the Paramount business and will be quickly rebranded as Prezzo, or retained as Caffè Uno. There are two northern units, with the rest being in excellent locations in the Home Counties, ex London. The acquisition doubles this year’s development pipeline. “As the consideration is paid from cash reserves, the deal is almost immediately earnings enhancing. The acquisition price of £3.1m should rise to £7m post development capex; equivalent to just £636k/unit and our £1m ebit upgrade is based on Prezzo unit averages. “We would expect £1.5m to £1.75m incremental ebit once the units reach full maturity.” Parson added that the new 60p share price target was based on 11.5x P/E ratio and 10% free cashflow yield.