Goldman Sachs reinstates IAG at buy

International Airlines Group was set to see a marked and sustained improvement in its short and medium-term financial performance, prompting analysts at Goldman Sachs to reinstate their ‘buy’ recommendation on the carrier’s stock.

For 2015-2018 the company would generate €1bn a year in free cash flow, up from €242m over the period 2010-2014.

Similarly, its cash return on capital invested would rise to 16.7% in 2017 from 10% in 2014, the broker predicted.

Nonetheless, the valuation of the company’s shares had failed to reflect that better than historical performance.

The stock was trading on estimated EV/EBITDAR multiple of 5.2 times, instead of the 5.9 it had averaged since 2002.

Goldman set a 12-month target price of 755p on the shares, pointing out the company’s upcoming capital markets day on 6 November.