Broker snap: IAG's guidance could be too optimistic, says Investec

11th May 2012 11:29

Investec reiterated its sell rating for International Consolidated Airlines Group (IAG) on Friday morning, saying that the firm's first-quarter results highlight the challenges ahead.The group reported an operating loss of €249m in the first three months of the year, the bottom-end of the €200-250m loss consensus range. Revenues were strong within the British Airways division, but this was counterbalanced by a range of revenue and cost challenges at its Spanish airline Iberia, the broker said.Investec highlights IAG's outlook as being rather weak, with the group saying that the Spanish (and wider Eurozone) macro-economic backdrop has deteriorated, as seen in Iberia's results."Management has guided to EBIT [earnings before interest and tax] break-even for the year, including BMI losses. We see this as optimistic and place our forecasts under review. Overall we believe it is right to remain cautious on the shares," Investec added.A 100p target price has been retained for the stock.BC