The investment bank, Merrill Lynch, has upgraded the French drinks group, Pernod Ricard, from "sell" to "neutral" after the company reported better-than-expected results and maintained its 2002 forecasts.

"The ability to maintain full-year forecasts gives strong EPS (earnings per share) visibility in an uncertain market," Merrill Lynch said. Analysts at Merrill Lynch added that the integration of the Seagram business had been completed more effectively than they anticipated. But they voiced some concern as to whether Pernod Ricard would be able to revitalise some of the Seagram brands, as well as concerns over the prospects for growth in France and Pernod Ricard's competitive position in the US.

Yesterday, ABN Amro raised its recommendation on Pernod Ricard from "reduce" to "buy".

Pernod Ricard posted a 63% rise in first half operating profits this week to €296m.