Deutsche Bank names IAG as short-term 'buy' in anticipation of recovery

Analysts at Deutsche Bank touted shares of International Airlines Group as a short-term buy idea after their valuation fell below their long-term average and in anticipation of a recovery in earnings coming out of the Covid-19 induced recession.

The stock had crashed by approximately two-thirds from their 17 January close, despite the carrier's strong margins and liquidity in comparison to its peers going into the current downturn.

With the shares trading at an enterprise value-to-forward earnings before interest, taxes, depreciation and amortisation multiple of just 3.7, they now saw scope for a roughly 20% rise, labelling the current valuation as "attractive".

Over the past 10 years, the shares had changed hands on a EV/EBITDA multiple of about four, they pointed out.

"We see scope for improved share price performance as European lockdown restrictions are gradually relaxed.

"[...] 'Early cycle' multiple would be more appropriate for network airline profits, which we expect to be recovering following a coronavirus-induced recession."