IAG share price rises as Citigroup lifts rating on British Airways parent

Shares in International Consolidated Airlines Group (LON:IAG) have climbed higher in London in today’s session, as Citigroup lifted its rating and price target on the British Airways and Iberia parent. The move marks a boost for the blue-chip company, whose shares came under pressure last week after the group issued a clarification in the wake of its full-year results to say that its free cash flow in the current year would be lower than last year. 

As of 10:18 GMT, IAG’s share price had added 1.08 percent to 544.80p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.97 percent higher at 7,173.34 points. The group’s shares have given up just under 13 percent of their value over the past year, as compared with about a 1.4-percent dip in the Footsie.

Citigroup lifts rating on IAG

Citigroup lifted its rating on IAG from ‘sell’ to ‘neutral’ today, and its price target on the shares from 508p to 560p. Proactive Investors quoted the broker as commenting that the group’s shares had fallen in recent weeks due to concerns about communication by management at the full-year results and the subsequent clarification statement on cash flow, risks around higher wages and industrial action by unions, the recent removal of the stock from MSCI’s global equity indices, lack of clarity over how the company will approach foreign ownership restrictions, and weaker consumer and business confidence ahead of Brexit.

Two upside risks for group

The broker, however, reckons that there are two upside risks on the horizon, which at the very least will likely halt the downward trajectory in IAG’s share price.

“Firstly, we are approaching a hefty cash distribution in the coming weeks,” Citigroup said, as quoted by Proactive Investors. “Secondly, it is apparent that the forward looking commentary from the US airlines on the North Atlantic is getting better (almost) by the day.”

As of 10:45 GMT, Monday, 11 March, International Consolidated Airlines Grp share price is 544.80p.