Broker tips: IAG, Thomas Cook, LSE

14th Dec 2011 12:50

Galvan Research and Trading has given airline International Consolidated Airlines (IAG) a sell rating, saying that recent forecasts are "now unrealistic".Last week, the International Air Transport Association (IATA) announced revisions to its industry outlook, downgrading its predictions for 2012. The association now estimates that airline profits for next year will be $3.5bn, compared to previous estimations of $4.9bn, with a net margin of 0.6%. Galvan's head of research Andrew Gibson said: "As with so many struggling industry sectors, the finger of blame points to the EU crisis, but specifically for IAG, there are growing concerns that the recent positive view projecting a £1bn plus profit for IAG by 2015 now looks unrealistic given the backdrop."The broker gives a target price of 135p.In a research note published this morning, analysts at Credit Suisse are highlighting the "soft winter (trading) picture" for package tour operator Thomas Cook. In their opinion it is so weak that, despite the company's management having "fleshed out" its turnaround plan and that a strategic review is now in place, they have been left with no choice but to slash their price target on the company's shares.Thus, Credit Suisse emphasizes how, "winter bookings are weaker in the UK and France relative to the September update and that capacity is to be lowered in most markets plus company notes margins generally lower given high input costs."The target price is cut from 100p to 40p.Credit Suisse has upgraded its rating for London Stock Exchange from underperform to neutral following Monday's announcement that the company is to take full ownership of FTSE International."We believe the deal further diversifies the LSE business and reduces reliance on more volume driven businesses which at the industry level are facing headwinds. The 100% ownership of FTSE should provide the LSE with more optionality in developing new products and growing into new markets as it can now drive forward the strategy," said analyst Gurjit Kambo.Credit Suisse leaves its 850p target price unchanged.BC/AB