Shares in International Consolidated Airlines Group (LON:IAG) have climbed higher in London today as analysts at Deutsche Bank lifted their rating on the European airlines sector. The move comes ahead of the British Airways and Iberia parent’s third-quarter update on Friday.
As of 13:24 BST, IAG’s share price had added 1.82 percent to 571.60p, marginally outperforming the broader market rally which has seen the benchmark FTSE 100 index surge 1.29 percent to 7,044.83 points so far today. The group’s shares have given up more than 12 percent of their value over the past year, as compared with about a 6.4-percent dip in the Footsie.
Deutsche Bank upbeat on airlines
Deutsche Bank upgraded the European airlines sector to ‘overweight’ from ‘underweight’ today. Proactive Investors reports that having rebased its 2019 forecasts for unhedged oil at around $85 a barrel, the analysts expect airlines to be able to at least sustain profitability next year and forecasts underlying profit (EBIT) growth of two percent.
The broker further maintained its ‘buy’ stance on IAG, and raised its price target on the shares from 750p to 770p.
IAG to post results on Friday
IAG is scheduled to post its third-quarter results on Friday and Proactive Investors reports that Deutsche Bank expects the numbers to be in line with its expectations (EBIT of €1.435 billion) and to be accompanied by positive commentary on transatlantic yields and the FTSE 100 group’s ability to recapture rising fuel costs as some of its US peers have done recently.
“We see IAG's multiple airline brands with specific customer offerings as facilitating a level of flexibility and efficiency that should allow it to approach future opportunities and risks from a position of strength,” the analysts pointed out.