JPMorgan sees further upside at IAG despite recent rally
International Consolidated Airlines Group SA (CDI)
234.50p
16:50 08/11/24
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.
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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."