Stockbroker Davy has added British Airways and Iberia parent International Consolidated Airlines Group (LON:IAG) to its conviction list, based on earnings growth, cash generation and the upside potential from a potential acquisition of Norwegian Air Shuttle, the analysts have said. The move comes as the FTSE 100 company, which also owns Aer Lingus and low-cost carriers Vueling and Level, prepares to update investors on its August traffic tomorrow.
IAG’s share price has fallen deep into the red in today’s session, having given up 1.23 percent to 691.40p as of 14:21 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.74 percent lower at 7,448.91 points.
IAG in Davy’s conviction list
Davy has added IAG to its conviction list, with a price target of 900p on the shares, which implies about a 30-percent upside from current levels. The Irish Times quoted the analysts as saying in a note that they believed that the group was “the only network airline in the US or Europe that will grow earnings this year”.
Davy further reckons that the British Airways parent will pursue an acquisition of Norwegian Air Shuttle which the broker argues would provide IAG with a number of ‘strategic benefits’ in terms of transatlantic routes as well as in its short-haul network in northern Europe.
“We believe the deal could generate synergies of up to €320 million and could add 100p to IAG’s share price,” the analysts pointed out, as quoted by the newspaper.
Other analysts on group
Citigroup lifted its rating on IAG to ‘buy’ last week, hiking its price target on the shares from 760p to 907p. According to MarketBeat, the British Airways parent currently has a consensus ‘buy’ rating and an average price target of 767.31p.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.