Prezzo, the Italian restaurant chain led by Jonathan Kaye, is being given little credit for the “impressive progress” it has made in building one of the leading chains in the UK, according to a leading analyst. Wayne Brown at Collins Stewart said that the chain had built a strong competitive advantage in the value-for-money segment of the market and despite its track record during the recession it shares “are pricing in downgrades”. He said: “Against the backdrop of a challenging consumer environment and declining disposable income, Prezzo has not only outperformed its peers but highlights a clear resilience when compared to retail spend. It remains one of the few structural growth area as well-invested branded chains take market share from under-capitalised independent operators.” Brown, who recommended a Buy for the chain’s shares with a target price of 85p, said: “There is an increasing likelihood of a P2P (MBO) if current valuations persist. With the Kaye family owning c.70% of the free float, one cannot ignore the return of an MBO.” The analyst said that with cash building on its balance sheet, the group could increase returns to shareholders through three routes: by way of a increased dividends or share buybacks; utilise its balance sheet strength for bolt-on acquisitions or use its excess cash to increase its freehold exposure which currently stands at c.13% of its estate. Brown said: “We would not be surprised is further small-bolt acquisitions are made over the next few months. These are unlikely to move the needle for this year in terms of revenues or profits but should rather strengthen the maturing profile of the group over the next two to three years.”