International Consolidated Airlines (LON: IAG) shares were given a boost Friday after being upgraded by analysts at both Barclays and Deutsche Bank.
IAG closed the session up 1.6%, adding to its recent run higher after a more than 3% climb on Thursday and a 2% rise on Wednesday.
Barclays analyst Andrew Lobbenberg lifted IAG to Overweight from Equal Weight, raising the firm’s price target on the stock to 170p from 165p in a note on European airlines…
The analyst told investors that while macro concerns have weighed on the sector, European travel demand will remain strong through the summer, while they will also benefit from lower fuel prices and a weaker US dollar.
That stance echoes our view, with EasyJet demand data indicating a potential surge in market momentum for European airlines.
At Deutsche Bank, analyst Jaime Rowbotham upgraded IAG to Buy, raising the price target to 200p from 180p, stating that he sees a “materially improved outlook” for European airlines.
The analyst explained that despite “exercising prudence” on yields, non-fuel unit costs, and oil itself, operating profits in 2023 could be 20% higher than previously expected and 18% higher than current consensus estimates on average.
Our view: Looking at demand data for some IAG airlines, we can see Google searches for British Airways are up 43% in the past year, while Iberia has climbed 32%, and Vueling searches have risen 52%.