Proactive Investors - RBC Capital has raised its price target for International Consolidated Airlines Group (LON:ICAG), the owner of British Airways, from 195 pence to 200 pence, signalling over 20% potential growth.
This optimistic revision follows IAG's strong third-quarter results and accounts for recent declines in fuel prices and currency fluctuations.
However, RBC notes that despite this potential, other European airlines may offer more attractive investment opportunities.
The investment bank's forecast for IAG in 2023 is notably more bullish than the market consensus, predicting a €3.51 billion operating profit, exceeding the Eikon consensus of €3.37 billion.
This expectation hinges on IAG achieving a substantial increase in its fourth-quarter earnings. However, RBC's projections align more closely with consensus estimates in 2024 and fall below them for 2025, reflecting concerns about increasing competition and capacity, especially on North Atlantic and long-haul routes.
RBC's analysis highlights the challenges IAG faces in maintaining revenue growth, particularly in long-haul markets where Passenger Revenue per Available Seat Kilometer (PRASK) has shown less than stellar performance.
The firm's updated price target is based on industry comparisons, suggesting a significant upside for IAG but tempered by the potential headwinds in the airline sector.
At 1.46 pm, the shares were steady at 163.25p.