UPDATE: Morgan Stanley Downgrades LAN Airlines to Underweight (LFL)

Morgan Stanley is out with its report today on LAN Airlines LFL, downgrading LFL from Equal-weight to Underweight. In a note to clients, Morgan Stanley writes, "We downgrade LFL as the stock looks expensive and assumes too much in the way of synergies and too little in the way of risks. Following the 1Q11 results, we have revisited our investment thesis. LFL currently trades at 21.8x 2011e EPS, roughly a 50% premium to history and the most expensive airline in our coverage. Also, our 2011 earnings estimate is 12% below consensus." Shares of LFL closed Friday at $28.66.