International Airlines Group: Impressive Turnaround Warrants A Strong Buy Rating

2025-03-30 13:25:59 ET

Summary

• IAG's stock price has surged nearly 150% since coverage began, driven by strong revenue growth and efficient capacity deployment in core markets.
• Operating profit increased by 22.1%, with operating margins rising to 13.3%, highlighting effective cost management despite higher employee and depreciation costs.
• The company has significantly improved its debt position, reducing net debt to EBITDA from 1.7x to 1.1x, and repaid €1.077 billion in debt.
• With a conservative price target of $4.90, representing a 35% upside, IAG is a strong buy due to its robust financial performance and undervaluation against peers.

International Consolidated Airlines Group ( BABWF , ICAGY ) is one of the few European airlines or airline groups on which I still have a buy rating. In October, I reiterated my buy rating for the airline group noting that there was 31% upside but a risk of plateauing stock prices as there would not be much upside beyond the valuation levels seen for 2024....

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