Broker tips: IAG, THG, Ibstock

Analysts at Berenberg lowered their target price on British Airways parent company International Consolidated Airlines from 260.0p to 180.0p on Monday, stating the company's third-quarter results highlighted "extreme uncertainty" going into winter.

Berenberg said IAG's bookings and cash burn ambiguity were "approaching a peak", in its view, leading it to again push out its 2021 demand recovery expectations to roughly 45% of 2019 revenues.

The German bank also said that details of IAG's Air Europa acquisition, employee cost restructurings and wide-ranging management changes had worried many investors.

However, while Berenberg lowered its price target on the stock, it also focussed on upside-tilted risks around a change in booking patterns - as well as downside protection from over €9.0bn in liquidity.

"Bookings remain subdued as public health lockdowns are imposed across Europe. Management highlighted that corporate revenue exposure is below 15%. We think the perception of IAG as an all-premium airline may lead to positive surprises as non-business travel recovers more quickly," added Berenberg, which left its 'buy' rating on the stock unchanged.

Analysts at Liberum initiated coverage on e-commerce firm The Hut Group with a 'buy' rating on Monday, calling the company "a gem" of a business.

Liberum said THG was "a unique play", being both a brand builder and a leading technology provider in the UK and slapped it with a 750.0p target price.

The investment bank said the online beauty and nutrition markets in which THG operate were growing at 10-14% per annum, respectively, but said given the company's proven disruptive credentials, driven by the power of its technology backbone, the firm should achieve a 20-25% sales compound annual growth rate between 2019 and 2024.

Liberum stated THG was "well-positioned" to benefit from the shift from offline to online retail sales, with the outbreak of Covid-19 having accelerated this trend as online retailers and platforms "significantly" outperforming during the April/May lockdown.

"With November and even potentially December likely beset by lockdowns and restrictions, we see the continued momentum across the THG platform as being maintained if not accelerating further," added Liberum.

Brickmaker Ibstock was under the cosh on Monday after Deutsche Bank downgraded its stance on the shares to ‘hold’ from ‘buy’ and cut the price target to 168.0p from 183.0p.

The bank said it was reducing its 2020 and 2021 pre-tax profit forecasts, target price and rating following the recent trading update.

"Although the shares do not look expensive (2021E EV/EBITDA 8.2x), we believe they are up with events," it said.

Deutsche Bank added that it continues to expect the group to reintroduce dividends from the 2021 interim stage, using 2.1x cover.