Broker tips: IAG, GKN, HSBC

1st Mar 2011 13:00

Charles Stanley upgrades its recommendation and target price for International Consolidated Airlines (IAG) as its market value has now factored in the rising prices of crude oil.Since the stock floated on 24 January, formed by the merger of British Airways and Iberia, €1.3bn has been wiped off the equity value.The rating is raised to a 'hold' (from 'reduce'), taking into account non-fuel costs and other variables, which keep earnings per share (EPS) forecasts steady at just over 27 cents. The target price is raised to 210p, from 200p.RBS stays positive on aerospace and vehicles engineer GKN after 2010 results came in above guidance and the dividend was better than expected."We see the GKN equity story as being primarily about organic growth with a degree of cyclical recovery thrown in," says analyst Sandy Morris.A target price of 225p is given, while its 'buy' rating is placed under review, as the shares currently trade within 10% of the target.Nomura keeps a cautious eye on HSBC as revenue growth at the global banking giant has "limited momentum".Analyst Robert Law says that "revenue growth is likely to remain challenged by continued low interest rates, lower Balance Sheet Management (BSM) revenues and the impact of the run-off of non-core positions in HSBC Finance."Additionally, with the potential impact from the Basel 3 requirements being more negative than expected, it maintains a 'neutral' stance on HSBC and confirms a target price of 725p.