British Airways Owner IAG Trades at Discount to European Peers

Dow Jones
08/21

0542 GMT - International Consolidated Airlines trades at a discount to European peers and its valuation doesn't reflect its leading margin and return profile, RBC Capital Markets analyst Ruairi Cullinane writes. The analyst forecasts an 18% EPS compound annual growth rate over three years, margin recovery and share buybacks. Still, Cullinane says long-haul capacity is set to remain relatively constrained on some of the British Airways owner's home markets into the winter season, and likely beyond. "The order books of European airlines point to significantly more growth in short and medium-haul than long-haul, in the medium term," he writes. RBC raises its target price on the stock to 500 pence, from 465 pence and holds its outperform rating. Shares closed in London at 418.70 pence and are up 1.1% over the year to date.

 

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