(MENAFN- ProactiveInvestors) The broker Liberum this morning made a compelling argument in favour of owner IAG’s takeover of Aer Lingus ().
Yesterday IAG () which also owns Spanish carrier Iberia said its bid approach had been rebuffed by the Irish.
Liberum reckons a tie-up makes sense as it would strengthen the enlarged group’s position in the North Atlantic market while allowing it to transfer some its traffic to Dublin. Crucially it would also give IAG vital and very valuable take-off and landing slots at a congested Heathrow.
Repeating its ‘buy’ 600p price target Liberum told investors: “IAG was designed from the outset to be a scaleable consolidation vehicle. Group operating airlines co-operate and co-ordinate with only some functions merged where it makes sense such as in cargo.
“This means there is clear scope to plug in additional airlines as they are acquired.”
Elsewhere in brokerland retailers were in the headlines. kicked things off with a downgrade to () dropping the shares in the grocer to ‘equal weight’ from ‘overweight’.
In a note to clients it said: “'s sales and profits have proved more resilient than those of its UK listed peers in recent years.
“We think this relative resilience may be sustainable given its differentiated offering its consistent execution and the format and geographical advantages of its store network.
“However we are also very much alive to investor skepticism - some of which is understandable - especially with set to clarify its own plans in January.
“ can only overcome these doubts by consistent delivery over a number of quarters.
“We also expect the degree of 's outperformance may appear to shrink in the quarters ahead - if only because peers face easier comps.
We therefore struggle to see how can be materially re-rated in the near term.”
Ahead of what is likely to be a manic weekend for our High Street stalwarts the broker Jefferies has taken a forensic look at the prospects of our leading retailers.
In doing so it has downgraded Next () ‘hold’ while promoting () once the sector basket case to its ‘buy’ list.
() meanwhile remains a ‘buy’ although the price target has been tickled a little higher to 550p a share.
“M&S fared poorly in our July survey despite a net 29% of consumers saying they liked the new website” Jefferies said.
“Some execution issues are likely to persist (such as delivery delays following Black Friday) but we see grounds for optimism now that the tablet mobile website has been re-launched and M&S has significantly improved its delivery offer.”
Shares in the satellite communications group Inmarsat () were lower in this morning after Goldman Sachs took out the red pen.
Moving directly to ‘sell’ from ‘buy’ the American investment bank expressed worries over the level of US government spending and the take-up of a new product aimed at the maritime market.
“On our base-case forecasts the longer-term outlook is attractive but we expect these risks to drive near-term relative underperformance” it said in a note to clients.
Goldman’s valuation of Inmarsat was also pegged back – to 690p from 870p previously.
Rounding up the major moves of the morning there were upgrades for WPP () and ()
Citi moved to ‘buy’ from ‘neutral’ on the market giant while Bernstein went to ‘outperform’ from ‘neutral’ on the insurer.
Finally in a note on the services sector Goldman dropped () to ‘neutral’ from ‘buy’.
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