Broker tips: AA Group, IAG, AstraZeneca

Analysts at Liberum were undeterred in their positive view on AA's shares despite news of the ouster of its boss, Bob McKenzie, for "gross misconduct" and the company's decision to guide towards a full-year performance in-line with expectations.

Although it might be lost on investors on Tuesday, there was tangible evidence that the firm was being successfully turned around, they said, emphasising that the company's free cash flow generation continued to be "very strong".

"The transformation may have taken longer but there is tangible evidence of improvement. Expect a negative reaction today but the [estimated free cash flow] yield should provide a floor."

Deutsche Bank said the recent decline in IAG's earnings per share relative to Deutsche Lufthansa and Air France-KLM was unwarranted, reiterating its 'buy' recommendation and 650.0p target in the process.

It did have higher operational and financial gearing in comparison to those two rivals.

Yet according to the investment bank, it was also a "better quality" business and was just as exposed to the same positive demand and supply dynamics.

In particular, Deutsche Bank said, the outlook for the second half was now more "uncertain", but not for IAG.

On a related note, analysts at Deutsche pointed to the positive second quarter update from Delta, with the US carrier having touted how UK had been a "bright spot" with strength expected to be sustained through the summer.

Analysts at Jefferies cut their target price for AstraZeneca's shares following various updates from the company, especially as regards its MYSTIC clinical trial for its anti-lung cancer tumour treatment Imfinzi.

The broker cut its target from 4,900p to 4,400p, telling clients it continued to believe it was "highly unlikely" that either the company's mono or combo arms for Imfinzi would meet statistical significance as compared to chemotherapy on rates of progression-free-survival.

There also continued to be "limited visibility" on the firm's core earnings per share, with 'one-off' externalisation and OOI contributions still driving roughly between 20% and 40% of the broker's estimates for operating profits in the next few years.

In April 2017, Jefferies downgraded the stock, due to its concerns around MYSTIC and the company's "uncomfortable" level of dependence on asset sales and outlicensing in order to prop up its ongoing operations and dividend payout.

Furthermore, Astra's deal with Merck to develop and market its Lynparza treatment for multiple types of cancer would hit the company's profitability.