British Airways owner International Consolidated Airlines Group SA (LSE:IAG) gained altitude on Friday after unveiling a new buyback and consensus-beating third-quarter figures.
Shares jumped over 6% following the update, which showed operating profit up 15.4% at €2.01 billion (£1.67 billion) over the fourth quarter and a new buyback of €350 million.
Panmure Liberum analysts noted the profit, which was aided by unit revenue growth on strong demand for transatlantic and European travel, had outdone expectations.
Reiterating a ‘buy’ rating, analysts said “we anticipate upward pressure on consensus, adding IAG’s valuation had “decoupled from its financial performance”.
The market is “completely overlooking its pre-pandemic track record of superior return on invested capital,” Panmure said, “which it has resumed”.
eToro analyst Mark Crouch echoed the view, noting that “psychological rather than fundamental” factors had prevented IAG shares from returning to pre-pandemic levels.
“The fact IAG waited so long to reinstate their dividend, while frustrating for shareholders, demonstrated strict capital discipline,” he said.
“This morning’s announcement [that] IAG plans on buying back €350 million of its own shares suggests the business is well and truly back to firing on all cylinders.”
Panmure reiterated a 450p share price target for IAG, reflecting a prospective 105% rise on Thursday’s close.
Shares were up 6.7% at 233.46p on Friday.