British Airways owner, International Consolidated Airlines Group SA (LSE:IAG), could be worth as much as 350p per share, according to analysts at Liberum.
That is more than double the 152p price that shares are fetching today in London after a further 1.5% rise today.
In a note following the airline’s first quarter results on Friday, Liberum's Gerald Khoo said a more favourable fuel cost outlook and resilient demand will drive material upgrades to short-term estimates.
He has updated his fuel price assumptions to reflect the sharp fall and now assumes $750/tonne for the unhedged portion of the fuel bill (vs. $900/tonne previously).
He explained supply chain bottlenecks constrain the industry’s ability to add excess capacity, “underpinning both strong unit revenue trends and our optimism on the outlook.”
“We consider IAG’s rating to not reflect its undiminished strategic positioning,” Khoo commented.
As a result, he raised his price target to 350p per share from 240p and reiterated a buy rating.