Shares in International Consolidate Airlines Group (LON:IAG) have lost ground in today’s session as HSBC lowered its rating on the British Airways and Iberia parent. Proactive Investors reports that the analysts believe that the market overreacted to the company’s recent better-than-expected first-quarter profits.
As of 13:23 BST, IAG’s share price had given up 2.28 percent to 686.60p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.62 percent lower at 7,828.25 points. The group’s shares have added more than 14 percent to their value over the past year, as compared with an over four-percent rise in the Footsie.
HSBC lowers IAG’s rating
HSBC lowered its rating on IAG to ‘reduce’ today, while lifting its price target on the shares from 570p to 590p. The move came after the company, which also owns Aer Lingus and low-carriers Vueling and Level, posted a rise in quarterly profits earlier this month, having benefitted from currency tailwinds.
“We believe that the market has overreacted to the moderate good news of the Q1 results and seems to be overlooking the pressure from rising fuel prices,” the analysts explained, as quoted by Proactive Investors. The broker forecasts year-on-year declines in profit for fiscal years 2018 and 2019, which is 17 percent below the latest Bloomberg consensus forecast for 2018 and 26 percent lower for 2019.
Other analysts on group
Liberum Capital reaffirmed its ‘buy’ rating on the British Airways parent earlier this month, without specifying a price target on the shares, while Sanford C. Bernstein, which also sees IAG as a ‘buy,’ set a valuation of 710p on the stock. According to MarketBeat, the blue-chip company currently has a consensus ‘buy’ rating and an average price target of 697.13p.