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JPMorgan sees further upside at IAG despite recent rally

09:05, 13th May 2024

[eqroy - stock.adobe.com]

British Airways owner IAG (IAG) Follow | IAG was making gains in the market on Monday following positive comments from JPMorgan, which said that earnings momentum should continue to take the shares higher.
The bank reiterated its 'overweight' position on the shares, which was up 2.1% at 185.02p by 0953 BST.

Despite the recent rally - the stock has gained more than 30% since 5 March - JPMorgan said price growth, cost execution and lower disruption should benefit results in the coming quarters.

First-quarter results from IAG last week showed a "small beat" in earnings before interest and tax (EBIT), said analyst Harry Gowers. Meanwhile, strong pricing reinforces the bank's confidence over full-year results, while cost pressure from investments and wages is "likely to fade".

"We continue to see an opportunity for IAG to outperform consensus expectations, where we are now c8% above company consensus EBIT for 2024E, pre any moves in consensus, despite the start of a re-investment cycle (higher opex/capex)," Gowers said.

"The re-investment back into the business should then benefit longer-term earnings, with management on the call stating they expect British Airways could recoup its c€500m EBIT shortfall vs. 2019 over the next 1-2 years."

Stock Chart | IAG

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