Macquarie has downgraded Virgin Australia (ASAX:VAH) to Neutral from Outperform following the airline's FY13 earnings downgrade this week. Although Etihad's on-market purchases are supporting VAH's share price, the stock's free-float has fallen below 30%, making it less relevant for index and other active fund managers. As such, the price target is reduced to 42c (current price $0.41). Similarly, BoA Merrill Lynch has cut earnings forecasts by 180% and 70% in FY13-14, lowering its target price to 52c. However, the broker retains a Buy rating, noting the recent fall in the share price. Furthermore, support for the stock is offered at 37c book value and by Etihad looking to increase its stake from 10% to 20%. There is speculation that after the profit downgrade this week - the second in three months - VAH may consider privatisation through the buyout of the 23% free-float by Singapore, Air NZ and Etihad.