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RBC upgrades IAG to ‘outperform’, thinks shares could surpass £10 over longer-term

The British Airways owner has seen its share price slide by almost 20% over the past few weeks, which is more than the declines seen by most of its European peers
british airways planes
RBC has a price target of 650p, although it does note that shares could hit 1,200p over the long-term

International Consolidated Airlines Group PLC (LON:IAG) has been upgraded by RBC Capital following the recent nosedive in the British Airways owner’s share price.

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.

READ: Could other firms bar British shareholders in event of a hard Brexit?

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.

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