RBC Capital has raised its price target on International Consolidated Airlines Group SA (LSE:IAG) to 500p, up from 440p, saying the British Airways and Iberia owner is delivering on promises while the market remains stuck in the past.
Following a stronger-than-expected first-half showing, the bank has lifted its earnings forecasts by around 5% to 6% across the next three years and is now at the top end of consensus for 2025. RBC said its projections remain ahead of the market through to 2027.
The message is clear: IAG is already hitting numbers the market was expecting it to reach further down the line.
RBC believes there’s more to come, helped by solid capacity on the group’s core routes, lower fuel costs, internal cost-saving efforts and the potential for more share buybacks.
Those themes are not new, but what’s changed is the visibility. IAG has long been on a mission to simplify its sprawling operations and lift margins. The results now appear to be coming through. RBC’s upbeat view reflects this improving execution rather than any leap of faith.
The upgraded forecasts come with a reiteration of the bank’s “outperform” rating. With the shares trading at 374p at the time of writing, the new price target suggests around 34% upside.
The bank’s analysts summarised the story as a case of underpromising and overdelivering. For a sector still grappling with patchy demand and fragile balance sheets, that is starting to look like a competitive edge.
In afternoon trading, the shares were down 1% at 370.10p.