Broker tips: IAG, HSBC, Dechra Pharmaceuticals

Analysts at Citi reiterated their 'buy' recommendation for shares of IAG while downgrading that for WizzAir to 'sell', in anticipation of a better performance by long haul carriers in comparison to their short haul peers.

"We believe the long haul airlines will benefit from the continued momentum in cargo, recovery in corporate travel and transatlantic and the reopening of Asia Pacific travel," they said in a research note sent to clients.

Citi also double upgraded shares of Lufthansa to 'buy' and raised their recommendation for Air France-KLM to 'neutral'.

'Buy' ratings for RyanAir and Turkish Airlines were also reiterated.

EasyJet was kept at a 'sell'.

Analysts at Bank of America raised their target price for shares of HSBC, telling clients that the prospects for share buybacks by the lender were brightening.

According to Dow Jones Newswires's Philip Waller, citing its estimated increases in HSBC's cash flows, BoA said the Asia-focused lender looked set to return more cash to shareholders than expected - despite risks.

Among the potential risks cited were changes in interest rates and the impact on business in Hong Kong of legislation out of Beijing.

Nevertheless, HSBC was also set to lower its own risks.

"First, since its announcement of a buyback with 3Q21, it has outperformed close peer StanChart by 10 [percentage] points," BoA analysts reportedly said.

"We think this emphasizes the value of the $9 billion upcoming capital return. Second, a normalization of treasury could lock in forward curves. We reiterate our buy rating."

BoA raised its target price for HSBC's shares from 520.0p to 550.0p.

As of 1525 GMT, shares of HSBC were trading up by 5.09% at 471.50p.

Dechra Pharmaceuticals was under the cosh on Tuesday after Exane BNP Paribas initiated coverage of the stock at ‘neutral’ on valuation grounds.

"Dechra is the ninth largest animal heath player. Astute positioning, ongoing earnings per share upgrades and M&A have led the company to materially outpace the market in the last decade," Exane said. "This is likely to continue but a particularly punchy valuation leads us to initiate at neutral despite short-term upside risks."

As far as upside risks are concerned, Exane pointed to the upcoming approval of topical spray Tri-Solfen in Europe.

Exane said it expects Dechra to keep outperforming its markets. It said pipeline strength and geographical expansion of existing products should allow the company to post growth of around 8% a year to 2024. "Post pandemic, we expect Dechra to return to its highly successful M&A strategy," it added.

Exane has a 5,600p price target on the shares.