Buy Recommendation for IAG: Strong Earnings, Strategic Market Position, and Investment-Grade Financial Health

DBS analyst Tabitha Foo has maintained their bullish stance on IAG stock, giving a Buy rating on May 27.

Tabitha Foo’s rating is based on several compelling factors that highlight the potential for International Consolidated Airlines Group (IAG) to deliver strong financial performance. The company’s adjusted earnings per share exceeded expectations, driven by robust demand in premium cabins and lower fuel costs. Despite some softness in the US leisure market, forward bookings remain solid, indicating a stable earnings outlook. IAG’s diverse portfolio of airline brands, including British Airways and Iberia, positions it well in the European market, with a strong presence in the premium leisure and business segments.
Additionally, IAG’s earnings trajectory is promising, supported by strong demand in the premium-leisure sector and limited capacity growth in Europe. The company’s strategic position in the transatlantic market, where capacity is constrained, further enhances its prospects. IAG’s financial health is underscored by its reduced leverage and recent upgrade to investment-grade status, allowing for potential shareholder returns through dividends and share buybacks. While macroeconomic and geopolitical challenges exist, IAG’s disciplined capital allocation and strong market position justify a Buy rating with a target price of GBP 3.80.

Foo covers the Industrials sector, focusing on stocks such as Delta Air Lines, International Consolidated Airlines, and AIR France KLM. According to TipRanks, Foo has an average return of 13.1% and a 62.67% success rate on recommended stocks.

In another report released on May 27, RBC Capital also maintained a Buy rating on the stock with a £4.40 price target.