Analysts at Credit Suisse reiterated their ‘outperform’ recommendation and 228.0 target price on shares of IAG, hailing management’s target of returning to an operating margin of 10-15%.
Further clarity around the “building blocks” for returning to that level would eventually advance the investment case, they said in a research note dated 7 May but published on 10 May.
As well, their expectation was that cost-cutting, premium leisure growth and tight capex management could “ensure” attractive free cash flow generation – potentially for as soon as 2022.
“We think a renewed flow of forward bookings could meaningfully alter perception around leverage,” they added.
Nevertheless, their 2.3bn estimate for the carrier’s operating loss in 2021 was worse than the -1.7bn which the consensus had penciled-in.
The analysts also noted how investors hopes for a UK-US travel bubble had been dashed just the day before the research note had been written up.
