The FTSE 100 group, which also owns Iberia and Aer Lingus, has seen almost 20% wiped from the value of its shares over the past month.
Analysts at the mid-tier Canadian investment bank have argued that the decline is too harsh given that there has been no change to forecasts or the uncertain UK outlook.
“In our previous note [last week], we stated we would review our share price rating if the share price fell to 500-515p,” read a note to clients.
“With a price within 2-3% of this level, we now upgrade to ‘outperform’ after 20%-25% relative under performance to Air France-KLM, Finnair, Lufthansa, and Scandinavian Airlines year-to-date.”
Could shares hit 1,000p?
The analysts repeated their price target of 650p, although they add that there is the possibility the stock could head up past 1,000p over the longer-term.
“We think the long-term potential for a 1,000-1,200p share has been overlooked.
“Though only a minority (35%) prospect in our PT, we think that with a close to 5% DPS yield support, investors with a view beyond H1-2019 delivery should now revisit the shares.”
The upgrade failed to stir the market, with IAG inching 0.3% lower to 532p in late-morning trading on Wednesday.