London (Thomson Financial) - Goldman Sachs has upgraded British Airways PLC (BA) to 'buy' from 'neutral', but reduced its price target to 330 pence from 350 on valuation grounds this morning, according to traders.
In a note, Goldman Sachs said it believes BA screens as very cheap, on an all-time low EV/sales multiple of 0.6 times and on price-to-book of 1.0 times full-year 2009, in particular when reduced leverage is taken into account.
In the brokers view, BA is a strategically attractive asset due to its Heathrow position and its returns and has a capex liability no bigger than Air France-KLM or Lufthansa.
However, the broker is concerned that consensus is too high against its estimates and expect company guidance for 2009 to be below consensus expectations.
The broker cut its 2009 EPS estimates by 15%, to 34.68 pence from 40.85 and its 2010 EPS by 19%, to 33.35 pence from 41.06.
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