Broker snap: Investec downgrades IAG after strong run

Investec has downgraded its rating for British Airways owner International Airlines Group (IAG) from 'buy' to 'hold' after strong gains seen across the airlines sector since the start of the year."European airlines have benefited from reduced capacity and a flattening of fuel prices in 2013. Strong yields have led to stellar trading for most airlines, driving a material sector re-rating," said analyst James Hollins.For IAG specifically, the stock had jumped by nearly 70% in the year to date as of last Friday. Looking forward to 2014, Hollins said that rising capacity in the industry and stubbornly-high fuel prices will act as headwinds. "While jet fuel pricing has stabilised somewhat after a seemingly unstoppable rise between 2009 and 2011, the recent rise in jet fuel prices and continued oil pricing at over $100/barrel are still cause for concern and a severe headwind to airlines' profitability."IAG's downgrade is due to concerns over the company's ability to drive further share-price outperformance given pressures on both premium and short-haul yields.Nevertheless, the target price for the stock was raised from 270p to 320p.The share price was down 3.58% at 304.5p as of 10:58 AM.Elsewhere in the sector, Investec upgraded Ryanair from 'hold' to 'buy', though easyJet ('buy') still remains its top pick and Air France its key 'sell.'BC