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HSBC upgrades IAG to 'buy' following election results

By Alexander Bueso

Date: Friday 13 Dec 2019

LONDON (ShareCast) - (Sharecast News) - Analysts at HSBC hiked their target price and recommendation for shares of IAG in the wake of the 2019 UK general election results.
In a research note sent to clients, analysts Andrew Lobbenberg and Achal Kumar lifted their target price for shares of IAG from 550.0p to 750.0p, highlighting the impact that a stronger pound had on their costs and of increased consumer and business confidence on their topline.

Nonetheless, over the medium-term, uncertainty remained, with UK-EU trade talks necessarily set to include some form of re-entry into the bloc's Single Aviation market.

"Short term, HSBC expects GBP to strengthen (revised forecast USD1.45 by end-2020), and consumer and business confidence to improve as uncertainty abates," they said.

"Thereafter, focus will return to the EU trade deal, which for the airline industry would target some form of re-entry into the EU Single Aviation market."

To take note of, while Lobbenberg and Kumar raised their estimates for IAG and RyanAir's revenues, their cost estimates were mostly unchanged.

In the same note, HSBC lifted its target price for RyanAir from €12.25 to €16.0, although that for Easyjet (buy) was kept at 1,500.0p and that for Wizz Air (hold) at 3,500.0p.

The broker's recommendations for IAG and RyanAir were raised from 'hold' to 'buy'.

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


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