Broker snap: Credit Suisse upgrades IAG to outperform

24th Apr 2012 14:57

Shares of International Consolidated Airlines Group (IAG) were flying high on Tuesday after Credit Suisse upgraded the stock from neutral to outperform.While the broker is expecting a first-quarter operating loss of €239m, it says that an encouraging outlook for summer pricing should boost sentiment.Additionally, "capacity declines in the peak summer season on the transatlantic, with rising JBA synergies, may drive a 2012E earnings surprise (we are 51% ahead of consensus at the EBIT level pre-bmi)."Meanwhile, Credit Suisse says that IAG's "strategic positioning continues to improve through consolidatory activity but also crucially through its tackling of legacy labour costs."The broker has raised its 2012 earnings before interest and tax (EBIT) forecast (excluding bmi) from €310m to €295m, and lifted its target price from 189p to 195p."We expect IAG to find strong support following an 11% decline in the past month (4% relative to the FTSE all share index) based on improving pricing and attractive strategic prospects."The stock was trading 3.94% higher at 169p before the close.BC