Morgan Stanley cuts its target price for Cathay Pacific

Morgan Stanley cut its target price for Cathay Pacific to HKD12 from HKD13 and downgraded its EPS forecasts for 2008 and 2009 after the company's worse-than-expected first half to June results.

It reiterated its "underweight" rating on Cathay Pacific.

The brokerage said, "We see more near-term negative catalysts for Cathay and the net EPS loss reported for the first half could drive the share price to HKD12," Cathay reported a first half loss of HKD0.17 per share compared to EPS of HKD0.66 a year earlier, significantly below the brokerage's estimate of HKD0.26 per share.

The airline had an operating loss of HKD522 million, while the bank had seen it making an operating profit of HKD2.0 billion.

At 10.58 am, Cathay Pacific was down HKD0.58 or 3.9% at 14.16, off a low of 13.88.