Broker tips: Bunzl, IAG

Analysts at Berenberg raised their target price on business services provider Bunzl from 2,250.0p to 2,650.0p on Tuesday, citing the group's "standout display of earnings resilience" in the first half.

While the analysts praised Bunzl first-half performance, they said the longevity of said earnings resilience would be tested in the second-half as the boost from Covid-19- related products experienced in the opening period subsides.

With the shares up by almost 20% year-to-date, outperforming the UK market by 38%, the German bank also thinks the tailwinds of the first-half now look fully priced-in.

Berenberg also said it remained cautious of potential macro distress in the foodservice and retail end-markets, as well as from the impact of government support schemes tapering later in the year.

However, the analysts pointed out that this was largely balanced by consensus estimates that were "not overly ambitious" - leading it to retain its 'hold' recommendation on the stock.

JP Morgan cut its rating on British Airways owner IAG to 'neutral' because of the airline group's exposure to long-haul flights and Covid-19 hotspots in the Americas and the threat of industrial action.

The bank said IAG, which also owns Iberia and other Spanish airlines, has a strong portfolio and respected management but that its outlook is uncertain. JP Morgan cut its target price to €2.50 a share from a €9 target set in December and reduced its rating from 'overweight'.

The company has been decisive in dealing with the coronavirus crisis, including halving its capital spending plan, agreeing new debt facilities and raising funds from sale and leaseback deals, JP Morgan analyst David Perry said.

After an imminent €2.75bn rights issue IAG will have liquidity to see it through an extreme scenario of 15 months of further lockdown. It is also cutting costs, mainly at BA, Perry said.

However, JP Morgan also noted that the Unite union is considering calling strikes at BA in response to the treatment of workers at the airline, which has is cutting thousands of jobs and weakening terms and conditions for remaining workers.