JPMorgan sees further upside at IAG despite recent rally

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International Consolidated Airlines Group SA (CDI)

301.50p

12:40 24/12/24

-0.03%

-0.10p

British Airways owner IAG's stock was making gains on Monday following positive comments from JPMorgan, which said that earnings momentum should continue to take the shares higher.

Travel & Leisure

9,215.48

12:54 24/12/24

0.49%

44.97

The bank reiterated its 'overweight' position on the shares, which was up 2.1% at 185.02p by 0953 BST.

Despite the recent rally – the stock has gained more than 30% since 5 March – JPMorgan said price growth, cost execution and lower disruption should benefit results in the coming quarters.

First-quarter results from IAG last week showed a "small beat" in earnings before interest and tax (EBIT), said analyst Harry Gowers. Meanwhile, strong pricing reinforces the bank's confidence over full-year results, while cost pressure from investments and wages is "likely to fade".

"We continue to see an opportunity for IAG to outperform consensus expectations, where we are now c8% above company consensus EBIT for 2024E, pre any moves in consensus, despite the start of a re-investment cycle (higher opex/capex)," Gowers said.

"The re-investment back into the business should then benefit longer-term earnings, with management on the call stating they expect British Airways could recoup its c€500m EBIT shortfall vs. 2019 over the next 1-2 years."