British Airways owner International Consolidated Airlines Group SA (LSE:IAG) shares have been downgraded to ‘Sell’ by UBS, which has set a new price target of 350p.
Analysts at the bank said that while IAG remains the strongest European long-haul network operator, it sees the balance of share price risk skewed to the downside.
UBS cited four concerns: slowing profit growth, North Atlantic yield trends, the UK economic backdrop, and changes to the Avios loyalty programme.
The Swiss bank said the UK economic environment and the North Atlantic market present the greatest near-term risks, and pointed to higher-than-expected June inflation at 3.6%, rising unemployment, and weaker job vacancy data.
It also flagged a reduction in North Atlantic capacity to the UK and weaker yields for some airlines, with IAG’s second-quarter passenger revenue per available seat kilometre at 0.6% compared with 13% in the first quarter.
Meanwhile, UBS increases its 2025 and 2026 earnings forecasts by 21% and 22% respectively, bringing them broadly in line with consensus for 2025, but around 8% below for 2026. It now forecasts lower EBIT in 2026 than in 2025.
UBS continues to value the shares at 3.5 times 2026 EV/Ebitda and said risks to its 'Sell' rating include stronger-than-expected financial performance or significant cash returns to shareholders through buybacks.
The shares fell 1.4% to 376.06p.