UPDATE 1-RESEARCH ALERT-Landsbanki raises Eaga to buy from hold

(Recasts, adds details)

Aug 27 (Reuters) - Landsbanki Securities raised the stock of British energy saving services company Eaga Plc EAGA.L to "buy" from "hold", as it believes Eaga will benefit if the government raises the level of fuel poverty funding due to higher fuel bills.

Landsbanki has a price target of 175 pence on the stock.

The brokerage said Eaga's share price is likely to be boosted by a rise in fuel poverty funding, further partnerships with energy suppliers, a negotiated rise in the 30 percent limit on fuel poverty installation work, and an acquisition.

However, Landsbanki said it is concerned about Eaga's ability to sustain revenue in spite of reduced fuel poverty funding through 2008-2011 with initial impacts to revenue and profits from its Government Contracts division from June 2008.

Eaga shares were up 0.56 percent at 134 pence at 11.20 GMT. (Reporting by Kumar Alagappan in Bangalore; Editing by Jarshad Kakkrakandy)