Brokers Liberum and Peel Hunt maintained their positive outlook on British Airways owner International Consolidated Airlines Group SA (LSE:IAG) after it exceeded expectations in the first quarter.
Liberum reiterated its buy rating with a target price of 450p, noting that IAG’s operating profit reached €68 million, significantly higher than the €9 million recorded in the previous year and above the consensus estimate of €48 million.
Liberum’s own forecast had predicted €17 million.
The outperformance was largely driven by higher passenger revenue, said the broker, which also noted a 4.4% year-on-year improvement in unit revenues, particularly a 6.5% increase in the North Atlantic region.
Peel Hunt has also reaffirmed its buy rating, setting a softer target price of 230p after IAG surpassed the broker’s operating profit forecast of €56 million.
IAG’s first-quarter revenue was €6.43 billion, surpassing Peel Hunt’s estimate of €6.32 billion, driven by a load factor of 83.1% compared to the estimated 81.7% and higher unit pricing.
Passenger revenue per available seat kilometre (RASK) rose by 4.4% to 7.34 cents, ahead of the estimated 7.10 cents.
Peel Hunt sees potential for consensus upgrades given the current low rating of IAG and current oil price stability.
IAG shares were swapping for 183.45p in Friday afternoon trades.