Citi upgrades IAG after 'unprecedented fall from grace'
Shares in British Airways and Iberia parent International Consolidated Airlines Group flew higher on Monday as Citi upped its recommendation to 'neutral' from 'sell' and lifted the price target to 560p from 508p following an "unprecedented fall from grace" in recent weeks.
FTSE 100
8,172.15
16:59 02/05/24
FTSE 350
4,492.44
16:49 02/05/24
FTSE All-Share
4,446.15
17:04 02/05/24
International Consolidated Airlines Group SA (CDI)
178.30p
17:14 02/05/24
Travel & Leisure
7,619.41
16:49 02/05/24
The bank highlighted five reasons for the recent weakness, including concerns over communication by management at the full-year results, risks around wage inflation, the technicalities surrounding a recent index MSCI removal, a lack of clarity over how the group will approach foreign ownership restrictions and a broader fear of weakening consumer and business confidence, particularly ahead of the Brexit deadline.
"With this blinding and, in-part, self-inflicted underperformance, we note that there are two upside risks on the horizon, which at the very least will likely halt the downward trajectory in the shares.
"Firstly, we are approaching a hefty cash distribution in the coming weeks. Secondly, it is apparent that the forward looking commentary from the US airlines on the North Atlantic is getting better (almost) by the day."
Shares in the IAG tanked earlier this month as bosses at the airline issued a "clarification" and told investors cash flow would drop this year, after finance chief Enrique Dupuy de Lome said free cash flow would grow.
Meanwhile, in February the stock was hit by news that MSCI was removing it from its global indices due to a decision to cap foreign ownership of the shares.
At 1030 GMT, the shares were up 1% to 544.60p.