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IAG share price underperforms as UBS trims stance on group

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Shares in International Consolidated Airlines Group (LON:IAG) have slipped into the red in today’s session, as UBS lowered its stance on the British Airways and Iberia parent. WebFG News reports that the broker has pointed to higher fuel prices as one of several potential headwinds for the FTSE 100 company.

As of 13:29 BST, IAG’s share price had given up 0.67 percent to 655.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.04 percent lower at 7,504.67 points. The group’s shares have added a little over 12 percent to their value over the past year, as compared with about a near-three percent rise in the Footsie.

UBS trims rating on IAG

UBS lowered its rating on IAG from ‘buy’ to ‘neutral’ today, and trimmed its price target on the shares from 780p to 705p. WebFG News quoted the analysts as pointing to rising fuel price with further potential headwinds given the possible impact on the supply of jet fuel from the incoming regulations from the United Nations' International Maritime Organisation.

The broker further reckons that rising airline industry capacity could impact the group’s yields, while “2019 is likely to bring the well flagged economic uncertainty from Brexit”. UBS has therefore trimmed its  2019 and 2020 forecast earnings per share by 14 percent.

“Should our forecasts prove correct it will be the first year since the formation of IAG that EBIT has not seen growth,” the broker concluded.

Other analysts on FTSE 100 group

Sanford C. Bernstein, which rates IAG as a ‘buy,’ set a price target of 735p on the shares yesterday, while Berenberg initiated coverage of the British Airways parent with a ‘buy’ rating and a valuation of 815p last week. According to MarketBeat, the FTSE 100 group currently has a consensus ‘buy’ rating and an average price target of 767.18p.

As of 14:00 BST, Wednesday, 26 September, International Consolidated Airlines Grp share price is 654.20p.

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