HSBC downgrades IAG; warns over complex Norwegian deal

HSBC has cut its rating on British Airways owner International Consolidated Airlines Group (IAG) stock to reduce but has raised its target price to 590p from 570p. The bank states that the market has overreacted to IAG’s first quarter profits of €280 million compared to €160 million in the year-ago period and ahead of analysts’ forecasts of €206 million, and is overlooking pressure from rising fuel prices. HSBC predicts annual declines in profit for fiscal years 2018 and 2019, but it stated that it likes the concept of IAG buying Norwegian: “We are conceptually enthusiastic about a potential Norwegian transaction,”