Broker tips: IAG, Morgan Advanced Materials, Robert Walters

Credit Suisse reiterated its 'outperform' stance on shares of IAG Group, pointing to the carrier´s upcoming Capital Markets Day as a potential catalyst for confidence in the firm and its self-help measures.

The Swiss broker´s analysts cut their estimate for the airline´s 2016 earnings before interest and tax by 4% to €2.5bn to reflect IAG´s own guidance but retained their target price of 469p for the stock.

IAG´s CMD on 4 November would help build confidence around the resilience of British Airways´s top-line growth in its premium segment, the analysts emphasised.

New BA chief Alex Cruz was also expected to unveil new self-help initiatives centred on increased efficiency at BA.

Credit Suisse saw the potential for €1bn of opportunities from such measures.

Furthermore, the company´s future cash distributions might become more compelling, althought that would depend on the resilience of the firm´s revenues, Credit Suisse said.

Analysts at UBS lifted their target price on shares of Morgan Advanced Materials from 245p to 285p, but stuck to their 'neutral' recommendation on what they described as a serially underperforming engineer.

To prove their point, they highlighted the company´s own guidance for R&D investment to increase by just 1% of sales over the next three to five years.

That, they said, suggested little change to the underlying performance of the bussiness over the medium-term.

Their forecasts called for organic sales to expand at a compound annual growth rate of 2.4% with margins at roughly 12% over 2016 to 2020, in comparison to the equivalent average for its sector peers of 3.5% and 15%, respectively.

Numis on Monday raised its recommendation on Robert Walters to ‘add’ from ‘hold’ and lifted its target price to 400p from 275p after the recruitment firm reported its third quarter results.

On 17 October, the group reported a 9% increase in gross profits to £23.4m in the three months ended 30 September. Reported net fees grew 8%, compared to a Numis forecast of 3%, driven by demand in Europe.

“Following the stronger-than-expected Q3 trading performance, and applying recent foreign exchange moves, we have adjusted our enterprise value / net fees valuation model and increased our target price to 400p from 275p," the analysts said.