IAG share price outperforms as Merrill Lynch remains bullish on stock

on Jan 3, 2017
Updated: Oct 21, 2019

Shares in British Airways and Iberia parent International Consolidated Airlines Group (LON:IAG) have advanced in London in today’s session, outperforming the broader London market, as analysts at Bank of America Merrill Lynch reiterated their bullish stance on the stock, while hiking their valuation on the company. The broker argues that the recent share price underperformance of the company versus US airlines is unjustified.

As of 14:10 GMT, IAG’s share price had added 1.45 percent to 447.30p, outperforming the blue-chip FTSE 100 index which is currently 0.50 percent better off at 7,178.90 points. The group’s shares lost just under 27 percent of their value last year, as compared with a more than 15-percent rise in the Footsie.
BofA Merrill Lynch reiterated its ‘buy’ rating on IAG today, while lifting its price target on the shares from 500p to 550p, seeing the recent share price underperformance versus US airlines as unjustified. The analysts further pointed out that having resolved recent pension discussions, the group’s near five-percent is seen to have upside risks, while the market is expected to come around to the advantages of the British Airways franchise alongside the cost savings at Iberia and Aer Lingus.

Sharecast quoted the broker as adding that the fact that the shares trade for around six times earnings is “attractive, in our view, particularly given that consensus is conservatively assuming little/no EPS growth next year”.
The comments are a boost for IAG, whose British Airways unit faced industrial action by its ‘mixed fleet’ cabin crew ahead of the holidays. Trade union Unite, however, subsequently called off the strike, following a new offer from the British flag carrier.
According to MarketBeat, IAG currently has a consensus ‘buy’ rating and an average price target of 552.12p on the shares.
As of 14:59 GMT, Tuesday, 03 January, International Consolidated Airlines Grp share price is 446.10p.

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