British Airways, Aer Lingus, Iberia and Vueling owner International Consolidated Airlines Group PLC (LON:IAG) saw its shares drop 4% this morning after Bank of America Merrill Lynch double-downgraded its rating for the FTSE 100-listed firm.
In a review of the airlines sector, the US broker cut its rating for IAG to 'underperform' from 'buy' and reduced its price target to 500p from 550p.
By mid morning, IAG shares were down 22.5p at 527.0p.
In a note to clients, the BofA ML analysts said they think that IAG's North Atlantic performance could stall in the second quarter and second half of this year due to a number of fundamentals factors and deteriorating sector sentiment.
They noted evidence to suggest that ”broader corporate travel spend, in particular financial services, will see pressure through the course of 2017.”
Ryanair upped …
However, conversely, the broker upgraded its rating for Irish budget airline Ryanair PLC (LON:RYA) to 'neutral' from 'underperform' with an increased target price of €15.30, up from €12.50.
The BofA ML analyst said: "Given Ryanair is still being one of the most loved share prices and with recent traffic statistics persistently choosing volume growth over pricing power, we believe waiting for a pricing inflection to the upside makes sense."
The broker retained a 'neutral' stance on discount rival easyJet PLC (LON:EZJ) but upped its price target to 1,050p from 1,030p.
easyJet shares on the FTSE 100 index were down 8.5p at 996.5p, while Ryanair shares shed €0.19 at €14.38.