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In 2024, IAG (LSE:IAG) shares almost doubled in worth and the airline group was topped the FTSE 100‘s highest flier. Due to earnings that beat market expectations, the corporate awoke from its extended, pandemic-induced slumber with a bang.
Nonetheless, the proprietor of British Airways and Iberia has made a turbulent begin to 2025. Down almost 20% since its peak in February, is the social gathering over for the IAG share worth? Or is it merely refuelling for one more leg up?
Right here’s what Metropolis analysts reckon with the inventory buying and selling at £2.94 as we speak (19 March).
The inventory’s subsequent vacation spot
Promisingly, the consensus forecast for IAG shares is optimistic. Though share worth progress is usually anticipated to sluggish in comparison with final yr, brokers’ median 12-month worth goal for the inventory is £4.03. That will be a wholesome 37% improve from as we speak’s stage.
Nonetheless, beneath the headline consensus determine, there’s a variety of opinions amongst institutional analysts protecting the corporate. The desk of skilled suggestions under illustrates these variations.
| Suggestion | Variety of analysts |
|---|---|
| Purchase | 6 |
| Outperform | 7 |
| Maintain | 4 |
| Promote | 1 |
| Robust promote | 0 |
On the higher finish, Panmure Liberum analysts consider IAG shares may rise to £5 subsequent yr, citing resilient journey demand and decrease jet gasoline costs as causes for optimism. If this prediction got here to fruition, the airline inventory would lastly eclipse its pre-Covid stage, marking an entire restoration from the pandemic.
However, Barclays analysts slashed their worth goal to £2.50 final week from a earlier forecast of £4.20. Competitors dangers from low-cost carriers and up to date revenue warnings issued by a number of main US airways underpinned this gloomier view.
What’s evident from these wildly totally different outlooks is that no analyst has a crystal ball. Dealer forecasts aren’t gospel. Buyers ought to weigh skilled opinions towards their impartial analysis and convictions.
My verdict
Extra bullish forecasts for IAG shares chime with my very own view. A £5 share worth goal is likely to be a bit steep, however I consider there’s a powerful likelihood additional progress might be achieved over the approaching months.
The inventory seems low cost, which bodes effectively for future returns. Buying and selling at a ahead price-to-earnings (P/E) ratio under 5.5, the enterprise is attractively valued relative to the FTSE 100 common and the airline sector as a complete. Different UK-listed aviation shares, similar to easyJet and Wizz Air, commerce for larger multiples of 6.9 and seven.1, respectively.
Moreover, the agency’s starting to reap the rewards from a £7bn modernisation funding in British Airways. This two-year plan includes a major money injection in IT infrastructure and hiring additional employees.
In FY24, IAG delivered a 22% improve in working revenue to achieve a report €4.3bn, exceeding analysts’ expectations for €3.7bn. A stellar efficiency for the UK flag service underpinned the group’s wonderful earnings.
Nonetheless, the corporate faces dangers from weak enterprise journey demand. In a world the place digital conferences have turn out to be commonplace, the group doesn’t anticipate company journey to ever return to pre-pandemic ranges. Whether or not IAG can proceed to fill enterprise and first-class seats with leisure passengers stays to be seen.
Nonetheless, with a contemporary €1bn share buyback programme to be applied over the subsequent 12 months and the resumption of dividends final yr, there’s loads to maintain potential buyers .
