British Airway’s owner International Consolidated Airlines Group SA (LSE:IAG) should do well this year say Liberum analysts, who see aviation demand staying strong.
The broker predicts the FTSE 100-listed airline will record full-year revenues of €28.8bn, rather than the €26bn it originally anticipated, with profits also expected to come in €20mln higher at €2.3bn.
Higher-than-predicted guidance from IAG is behind the upgrade, with passenger figures to sit around 98% of pre-pandemic levels, Liberum said, boosting revenue but also operating costs.
Liberum also raised the airline giant’s share price target to 240p from 220p, or 53% above Tuesday’s opening price of 156.5p, alongside reiterating its ‘buy’ rating.
“This reflects our optimism that economic activity, and hence air travel demand, will remain ahead of airline industry capacity relative to pre-pandemic levels,” Liberum noted.
Lagging recovery from the pandemic, due to travel restrictions, means there is still headroom for growth to continue across the sector, “even if there is an economic slowdown”.
“In our view, IAG’s favourable strategic positioning and long-term earnings potential have not been affected by the pandemic,” the broker added.