STOCKS NEWS EUROPE-BA climbs ahead of H2; UBS upgrades
Shares in British Airways (BAY.L) rise 2.9 percent ahead of its second-quarter results later in the week, with UBS upgrading its stance on the airline to "buy" from "neutral" on valuation grounds.
The broker also upgrades its recommendation on Air France-KLM (AIRF.PA), which rises 2.8 percent, to "neutral" from "sell" citing valuations. It says recent falls in the two airlines' shares, on the back of worries over the cost of fuel and yield pressures, may have been overdone.
"Since the recent highs we have seen BA and AFK fall (around) 37 percent and 27 percent respectively. We think the correction is now overdone," UBS analysts say in a note.
The broker says in the short term a higher fuel price should be supportive for yields as it dissuades inefficient capacity from returning.
After factoring in higher fuel costs at $77 a barrel, the broker adjusts downwards the target price for British Airways to 215 pence from 240 pence, cuts Air France-KLM to 11 euros from 12 euros, cuts Lufthansa (LHAG.DE) to 14.50 euros from 16 euros and adjusts Iberia (IBLA.MC) to 2.10 euros from 2.50 euros.
Lufthansa shares are up 1.7 percent and Iberia rises 1.9 percent.
Reuters Messaging rm://harpreet.bhal.reuters.com@reuters.net
