IAG (LON: IAG) shares took off Tuesday (pardon the pun), flying over 3.5% higher after Peel Hunt upgraded the stock and Liberum significantly raised its price target for the carrier.

IAG closed the session at 155.8p, adding to last week’s over 2% gain following its earnings release.

Peel Hunt analyst Alex Paterson raised the British Airways owner to Buy from Hold, increasing the firm’s price target on the stock to 175p from 165p, citing pent-up travel demand as one of his reasons for the upgrade.

The analyst also commented that the demand for travel and holidays is supportive of IAG’s outlook.

Meanwhile, Liberum’s Gerald Khoo reiterated a Buy rating, raised the price target for IAG to 350p from 240p.

Khoo said in his note that “a stronger earnings outlook translates into faster organic leverage reduction” for the company.

“We consider IAG’s rating to not reflect its undiminished strategic positioning.”Khoo wrote.

Last week the company, which owns other airlines such as Aer Lingus, Vueling and Iberia, reported robust first-quarter earnings, with healthy demand across all airlines and regions — 80% of its expected second-quarter revenue is now booked.

In addition, IAG expects operating profit before exceptional items above its previously guided range of €1.8 billion to €2.3 billion.

Investors (and us) are optimistic about the outlook for European airline stocks this year, with consumer demand remaining resilient despite sticky inflation.

Other carriers, such as EasyJet and Ryanair, previously stated that the consumer appetite for travel is robust. Meanwhile, TUI is set to report Wednesday, May 10 (tomorrow or today, depending on when this goes out).

By Sam Boughedda