Broker tips: Easyjet, IAG, Ryanair, Debenhams, Northgate

Bernstein sounded a cautious note on the European airlines on Monday, telling clients that the strongest phase of the cycle was now past.

The broker had a more constructive view on Postal & Logistics, saying it liked the fundamentals of the sector.

Yet most of that was already priced-in.

The broker initiated its coverage of Easyjet and IAG at 'outperform' but Ryanair, Lufthansa abd Air France-KLM were all started at 'underperform'.

Favourable economic growth and reduced fuel costs would help sustain a plateau in airlines' operating profits but at 12.5% they had nevertheless reached a peak.

Passenger growth would continue apace at about 3% a year but seat capacity was running ahead in parallel at 5%, Bernstein explained.

Hence, there were just too many planes around, it said.

"Ryanair is doomed to grow and will be forced to dilute its business model (target price: €14) and the remaining legacy groups will be short-term losers. For Lufthansa time is running out (target price: €15.4) and Air France-KLM has turned from innovator to laggard (target price: €8.1).

IAG (taget price: £7.1) on the other hand could protect its network, Bernstein said, while easyJet was building "castles and moats" at key European bases.

Analysts at Investec took an axe to their target price for Debenham's shares, predicting that a long slog lay ahead for the company against a "tough" industry backdrop, which might force it to reduce its payout.

On the back of the firm's lowered guidance, Investec's Kate Calvert marked down her full-year 2017 estimate for profits before rax by 5% to £95.5m.

What's more, if current conditions continued then the outcome might be a bit lower still, she said.

She also lowered her fiscal year 2018 estimate, projecting that FX headwinds were set to strengthen. In turn, that meant the company's anticipated flat fiscal year dividend payout might become unsustainable.

Changing hands at a calendar year 2018 price-to-earnings multiple of seven the valuation was not "compelling enough", Calvert said.

All told, she decided to move to a 25% discount to the average 10-year forward P/E multiple, from 10%, which lowered her target price for the shares from 46.0p to 39.0p.

Meanwhile, analysts at Numis stuck to their 'add' recommendation and 600.0p target price for shares of Northgate.

Weak UK trading during the second half of the company's fiscal year offset stronger performances in Spain and Ireland, leading analysts Julian Cater, Steve Woolf and James Beard to slash their earnings per share estimates for the company in fiscal years 2018 and 2019 by 10% and 11% to 46.6p and 48.5p, respectively.

However, managament had identified medium-term opportunities to leverage its infrastructurem deliver on growth and increase its return on capital employed.

Vehicle-on-hire trends in the UK over the back half of the year had been weak, but management had responded by making a number of new hires, including new managing, sales and interim marketing directors in the UK.

As well, strong growth in the Spanish market over the last six months of the year was expected to strengthen further after the government in Madrid managed to pass a budget.