Broker spotlight - IAG, Lloyds Banking, Capita, RBS ...



It’s time to take a flight with IAG (LON:IAG), says Liberum, after the owner of British Airways and Iberia posted an 80% rise in annual operating profit to €1.4bn.

The broker kept its buy recommendation and 600p target price as IAG benefited from lower oil prices and more efficient aircraft, although fuel hedging and currency movements partly offset that.

Liberum said the outlook was encouraging, with 2015 expected operating profit of more than €2.2bn at current fuel and exchange rates, which the broker said was well above its €1.9bn forecast.

Investec welcomed further recovery steps at Lloyds Banking Group (LON:LLOY) after the partly state-owned lender announced an annual dividend for the first time in more than six years.

The broker confirmed its ‘buy’ and 85p target price as Lloyds unveiled a 0.75p payout for 2014, although it noted that fourth quarter underlying pre-tax profit was 3% below consensus.

Investors should hang on to shares in Capita (LON:CPI) after Thursday’s “strong” results from the support services group, Berenberg said.

The broker, which has a ‘hold’ stance and 1160p target price, described its outlook as solid and predicted a 1-2% rise in market consensus.

“Importantly, it has had a very strong start to 2015,” analyst Simon Mezzanotte said in a note.

Investors hoping for a takeover of aircraft landing gear maker Meggitt are likely to be disappointed, UBS said.

On Tuesday, Meggitt unveiled a 9% rise in orders to £1.6bn, but reported flat revenue and an 11% fall in pre-tax profit to £328.7mln. 

It blamed currency movements and declining military and energy revenue, although civil aerospace revenue rose 6%.

The Swiss broker’s Charles Armitage said: “We do not believe Meggitt is a potential take-over candidate as we think it would be difficult to exceed the cost of capital, assuming realistic synergies, and therefore believe any take-over premium is unjustified.”

No bullish bets from JP Morgan Cazenove on Friday, but there were plenty of downgrades from the heavyweight broker.

It has dropped its target price on RBS (LON:RBS) by 15p to 385p, but kept its neutral rating on the state-backed lender after its results on Thursday.

Analysts at the firm are also less keen to board National Express (LON:NEX), cutting the target price down to 291p.

Weir Group (LON:WEIR) also suffered a downgrade from JP Morgan, with Liberum Capital sending out a sell rating on the oil services business too.

Good news for BG though, (LON:BG.), as Canaccord Genuity bumped up its target price on the gas producer to 1016p.

Premier Oil (LON:OIL) is in favour with Westhouse Securities.

Meanwhile, Bank of America analysts have checked into InterContinental Hotels (LON:IHG), upping their 'Neutral' stance to a 'Buy'.

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