Some of Britain’s biggest broker upgrades in early October focused on three familiar names across both the FTSE 100 and FTSE 250. Each of these UK shares has had encouraging developments in recent weeks, with analysts raising their expectations.
But as always, it’s worth looking at what’s driving the optimism — and the potential risks.
Tesco
Tesco (LSE: TSCO), the UK’s largest supermarket chain, is back in the spotlight after a series of analyst upgrades. UBS lifted its price target to 500p, while RBC Capital nudged its forecast to 445p, reflecting growing confidence in Tesco’s performance.
The grocer recently raised its profit guidance for the year after strong interim results, showing resilience despite cost pressures and fierce competition.
But it’s not all plain sailing. A potential price war looms as rival supermarkets slash prices ahead of the festive season. Tesco has already reduced prices on thousands of products to attract customers, but that strategy comes with risk.
Margin compression remains a concern if competition intensifies or inflation persists. Investors should weigh up whether the retailer can defend its market share without sacrificing too much profitability.
HSBC
HSBC (LSE: HSBA) also found itself in analysts’ good books this month, with Goldman Sachs raising its price target to 1,089p while keeping a Buy rating. The bank continues to focus on its strategy of simplification and efficiency, cutting costs and leaning into its strongest growth markets — particularly in Asia.
It’s also been active in returning capital to shareholders through buybacks, highlighting management’s confidence in future earnings. Its return on equity (ROE) is expected to climb in the coming years as it benefits from stable interest rates and disciplined cost control.
But banks never operate without risk. A slower-than-expected rate-cut cycle, tighter regulatory oversight, or credit losses in emerging markets could all dent profits.
For investors thinking about financial stocks, it might make sense to consider HSBC, but with a clear understanding of the global factors that could affect its earnings power.
Bodycote
Engineering group Bodycote (LSE: BOY) was another name receiving positive attention, as Deutsche Bank lifted its price target from 700p to 860p with a Buy rating. The bank’s analysts pointed to growing confidence in the company’s Aerospace and Defence division, which has been a key driver of revenue.
The company’s focus on thermal processing and advanced materials technology continues to position it well in high-spec manufacturing markets. In late July, the company’s share price surged 12.3% after it announced a £30m share buyback programme aimed at enhancing shareholder returns.
That said, it remains exposed to cyclical industries like automotive and general manufacturing, which can be volatile if global growth slows. Rising input costs and labour pressures could also weigh on margins.
Still, with management targeting steady growth through 2028, some investors might see Bodycote as a quality cyclical worth keeping an eye on.
Final thoughts
Broker upgrades don’t guarantee share price gains, but they can highlight where the market sees improving fundamentals. Tesco, HSBC and Bodycote each offer something different — from defensive retail strength to financial stability and industrial growth potential.
For investors considering UK shares this month, these three might be worth a closer look, provided risks are carefully weighed and portfolios remain diversified.
