When will IAG shares get airborne again? Here’s what one leading London bank reckons.
Shares in British Airways owner IAG (LON:IAG) have had more trouble getting off the ground than the planes it has mothballed during the pandemic.
Since early April the stock has lost around 25% of its value as the recovery in international air travel has been stalled by the Covid delta variant.
Fears the US may not open its air borders to European visitors as envisaged next month have further depressed sentiment.
Yet the ever-optimistic team at JP Morgan Cazenove (JPMC) is keeping the faith with IAG in spite of the headwinds.
That said, it had tweaked down its 2021-24 EBITDA and EPS forecasts and has set a new “multiples-based” price target of €2.45, down from €2.70.
Sticking with its ‘overweight’ recommendation, JPMC told clients: “The global aviation market remains very challenging.
“It remains very difficult to predict the pace and magnitude of the air traffic recovery and, as always, even harder to forecast fares.
“However, IAG has taken radical action to cut costs and this underpins our view that it can achieve attractive EBITA margins once the market begins to normalise, which we do expect in the next few years.
“We also note IAG’s very low valuation multiples….and so continue to recommend the stock to long-term investors.”