Black day for IAG shares despite the announcement of the distribution of the dividend in February, once the full year accounts were published, which the market did not expect. Shares of the company which brings together the airlines Iberia, British Airways, Vueling, Aer Lingus and Level, collapsed on Friday by 10%, the biggest drop since April, after having known the results of the first nine months of the year.
The third quarter accounts did not meet market expectations. Ivan San Félix, analyst at Renta 4, explains that the results “are lower than consensus forecasts in terms of ebit before extraordinary components, the main operating quantity, even if the company’s operational evolution remains very positive”. The expert points out that IAG has indicated that fourth-quarter bookings are “positive” and that it maintains its full-year earnings forecast and announcement of an additional dividend.
“Healthy balance sheet and high volume of liquidity” are two of the positive aspects that Pilar Aranda, analyst at Bankinter, highlights after learning of IAG’s results. The expert admits that they are worse than expected, “although it must be taken into account that the third quarter of 2024 was particularly strong”. Aranda is also focusing on the lowest increase in costs, after several quarters of increases. On the other hand, it insists that “demand remains solid in its main markets and especially facing the last quarter of the year”. The fact that it maintains guidelines in “a complex geopolitical context” leads the Bankinter analyst to reiterate the buy recommendation he has for the company.
RBC analysts point out that feedback on shareholder returns is “encouraging” and do not expect consensus operating profit for fiscal 2025 to change significantly after the third quarter results, given the slight decline in the third quarter. the recovery of business travel accelerates even further,” they add from the Canadian company.
One of the most positive aspects of these results is that IAG has practically completed its share buyback program for 1,000 million and Luis Gallego, CEO, anticipated this Friday the aforementioned intention to “announce further shareholder returns to the market”. On previous occasions Gallego had insisted that the company was able to distribute the surplus liquidity resulting from the strong demand and high performance of the various airlines.
Analyst Alexander Paterson at British investment bank Peel Hunt (buy) sees room for at least 3 billion euros in further capital returns. Furthermore, he points out that “the main deficit in the third quarter was the impact of the exchange rate on unit revenues, as well as slightly lower load factors.”
IAG shares accumulate profitability of more than 20% in 2025 despite the declines that its price is undergoing this Friday and profitability rises to 66% from the lows of the year marked in April. In the Bloomberg analyst consensus, 80% have a buy recommendation, 13.3% believe it is time to keep IAG stocks in their portfolio and only 6.7% have a sell recommendation.
The average target price is 5.33 euros, which implies a 12-month appreciation potential of 22% compared to current trading prices. Among the companies that fall within this consensus, the American investment bank Citi is the most optimistic, setting a valuation for the company of 7.04 euros per share, which represents a potential of 60% compared to the current stock price of around 4.33 euros.
The valuation of Panmure Liberum is under 7 euros, at 6.70 euros. All other consensus ratings are under six euros. Gerald Khoo, an analyst at the company, believes that “despite quarterly results falling short of consensus, operating profit continued to grow 2% year-over-year versus a comparative record.” “Half of the 7% decline in North Atlantic unit revenue is exchange rate related,” Khoo tells Bloomberg.
