Broker tips: IAG, M&S, Premier Foods

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. Looking forward in 2014, he said that rising capacity and stubbornly-high fuel prices will act as headwinds. HIgh Street giant Marks & Spencer (M&S) was performing well on Tuesday morning after Citigroup upgraded the stock from 'neutral' to 'buy' and lifted its target price from 470p to 535p."The combination of recent, material upgrades to UK economic growth forecasts, and M&S management initiatives have markedly improved the credibility of double-digit FY15 and FY16 M&S EPS [earnings per share] growth forecasts."Credit Suisse has lifted its recommendation for food manufacturer Premier Foods from 'neutral' to 'outperform' and raised its target price from 100p to 155p."Valuing a business that is structurally over-indebted where profit expectations are falling is nigh on impossible - a deteriorating profit outlook simply crushes the equity value (now only 17% of the enterprise value). However if the profits have stabilised and can even show some growth, then the reverse is true - the equity leverage into a profit upturn is material."BC