Deutsche Bank increased the price targets for British Airways’ International Consolidated Airlines Group SA (LSE :IAG), easyJet PLC, as well as other airlines, ahead of Tuesday’s results updates.
The shares of European carriers have risen an average of 20% each year since mid-December when analyst Jaime Rowbotham presented his previous outlook on the fourth quarter 2022.
This is pricing in “what’s clearly going to be an even better year than we had originally envisaged”, he stated.
Deutsche’s forecasts have been updated to reflect the current operating environment. Target prices were also raised to reflect this.
IAG’s target price was raised to 180p from 150p. The recommendation remained at “hold”. The target price for easyJet was raised to 410p, from 330pp.
Wizz Air Holdings PLC AIM:WIZZ, another company on a “hold” rating, saw its target price move to 3150p from 2550p. Ryanair Holdings PLC LSE:RYA’s target price was increased to EUR17.50 (from EUR16.00) and its rating reaffirmed at ‘buy.
These forecasts and prices assume that the price and pricing environment is strong as it was in the September quarter 2022.
Analyst noted that network airline yields were higher than 20% pre-crisis while low-cost carriers’ yields were greater than 10%.
He predicted that the second-half of 2023 will see ticket yields remain flat year-on-year at low-cost carriers and decline 5% at networks.
Air France-KLM and Deutsche Lufthansa AG, both of the other networks, are both rated a ‘hold.