Target prices for British Airways owner International Consolidated Airlines Group SA (LSE:IAG), easyJet PLC and other airlines were upped by Deutsche Bank on Tuesday ahead of coming results updates.
Shares in the European carriers have risen by an average of 20% since mid-December, when analyst Jaime Rowbotham provided his previous outlook for the fourth quarter of 2022.
This is pricing in “what is clearly going to be a much better year than we had previously envisaged”, he said.
Forecasts from Deutsche have now been updated to reflect the superior operating environment, with target prices lifted to reflect this.
For IAG the target price was lifted to 180p from 155p, with the recommendation kept at ‘hold’. For easyJet, rated ‘sell’ by the bank, the target was hiked to 410p from 330pp
Wizz Air Holdings PLC (AIM:WIZZ), another on a ‘hold’ rating, saw its target price moved to 3150p from 2550p, while the target for Ryanair Holdings PLC (LSE:RYA) was lifted to €17.50 from €16.00 and its rating reiterated at ‘buy’.
The forecasts and prices are based on the assumption that the strong pricing environment that was in evidence in the September quarter of 2022 persists throughout the end of last year and the first half of 2023.
Network airline yields were at least 20% above pre-crisis and low-cost-carriers’ yields more than 10% above, the analyst noted.
For the second half of 2023, he assumed ticket yields are flat year-on-year for the low-cost airlines and down 5% for the networks.
Of the other networks, Air France-KLM (OTC:AFLYY) and Deutsche Lufthansa AG are both rated ‘hold’.