DBS analyst Tabitha Foo maintained a Buy rating on International Consolidated Airlines (IAG – Research Report) today and set a price target of £3.50.
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Tabitha Foo has given her Buy rating due to a combination of factors that highlight the strong potential of International Consolidated Airlines (IAG). The company’s adjusted earnings per share have surpassed expectations, largely due to robust demand in premium cabins and reduced fuel costs. Despite some fluctuations in demand, particularly in the US leisure segment, forward bookings remain strong, supporting a positive earnings outlook. The diverse portfolio of airline brands under IAG, including British Airways and Iberia, positions the company well to cater to various customer segments and maintain a strong market presence.
Furthermore, IAG’s financial health has significantly improved, with reduced leverage and a return to investment-grade status, allowing for shareholder returns such as dividends and share buybacks. The company is also less affected by the GTF engine issues impacting other airlines and has hedged a substantial portion of its fuel exposure, providing some insulation against rising fuel prices. While macroeconomic and geopolitical challenges could pose risks, IAG’s promising earnings trajectory and strategic advantages justify the Buy rating, with a target price of GBP 3.50.
In another report released on May 12, Deutsche Bank also maintained a Buy rating on the stock with a £3.70 price target.