Are International Consolidated Airlines shares set to soar?

26th November 2013

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Despite the group’s stock soaring over the past year brokers are still coming out in force to back British Airways owner International Consolidated Airlines (ICA) writes Philip Scott.

This week analysts at Jeffries re-iterated their ‘buy’ recommendation for the FTSE 100 listed stock, as had Nomura a few days beforehand while The Share Centre has labelled the group its ‘share of the week’. Presently the firm’s shares are trading at circa 372.9p but Jeffries believes they could fly as high as 410p. The overall broker consensus on share data hub, Digital Look, has the shares edging towards a strong ‘buy’.

Established by merger of British Airways and Iberia in January 2011, IAG is now one of the largest airline groups with over four hundred aircraft, flying 55m passengers to some 200 destinations and on the back of the management’s efforts to restructure the firm, the shares have rocketed by 121% over the past 12 months.

Sheridan Admans, investment research manager at The Share Centre says: “IAG’s management is attempting to turn the business around. We are particularly interested in its plan centred on its Iberia and Spanish operations. We recently upgraded our recommendation on IAG to a ‘buy’ due to its cost cutting and structural changes. Whilst this may impact margins in the short term, over the longer term this strategy should support profitability.

“Whilst the slow European economy and fuel prices creeping back up remain a concern, as IAG updates its fleet to phase out the higher fuel burning 747’s these costs should be offset over time.  The group has delivered strong results this year beating consensus expectations.”

 

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