International Consolidated Airlines Group (LON: IAG) is set to release its first-quarter results on Friday, May 5, and with airlines experiencing strong demand over the last 12 months, expectations for the British Airways owner are high.
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IAG shares are up over 1% so far on Tuesday, and the stock has performed positively so far this, up over 22%.
In its 2022 final results, the airline group saw a strong recovery in its core markets as COVID-19 restrictions were lifted, driving revenue momentum for IAG. The company also returned to profit.
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In addition, IAG's heavy debt load is still a concern for many investors. It was reduced to €10.4 billion in 2022, but the company said it will be “broadly maintained” at the same level by the end of 2023.
Nevertheless, the airline firm said in its final results that it expects a further recovery in profits expected in 2023, with full-year operating profit before exceptional items seen in the range of €1.8 to €2.3 billion. Moreover, IAG said it is confident in returning to pre-COVID-19 levels of operating profit within the next few years.
Full-year 2023 capacity is expected to be approximately 98% of the 2019 level. The company said it anticipated capacity in Q1 to be around 96% of the Q1 2019 level.
The signs are positive for IAG's Q1. London's Heathrow was Europe's busiest airport in Q1, handling some 16.9 million passengers, a 74.2% rise compared to Q1 2022. Furthermore, other European airlines, such as easyJet, have reported strong results.
Last week, analysts at JPMorgan raised their price target on IAG to €2.40 from €2.20, maintaining a Neutral rating on the stock. Meanwhile, in late March, both Deutsche Bank and Barclays upgraded the stock.
Deutsche Bank analyst Jaime Rowbotham lifted it to Buy from Hold, raising the price target to 200p from 180p. The analyst explained that he sees a “materially improved outlook” for European airlines.
Barclays upgraded IAG (LON: IAG) to Overweight from Equal Weight, raising the price target to 170p from 165p. The firm acknowledged that macro concerns have weighed on Europe airlines, but they believe European travel demand will stay strong through the summer.
Overall, seven analysts have a Buy rating on IAG, while six have a Hold rating on the stock, according to TipRanks. The average price target of 191.74p represents a potential 23% upside.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.