Broker Snap: Credit Suisse raises target price on IAG

4th Mar 2013 11:56

A four-strong team of research analysts at Credit Suisse have increased their target price for International Airlines Group (IAG) and given the global airline group an "outperform" rating.The analysts raised their target price to 295p from 259p saying that reasons for optimism were multiplying.Their key takeaways from IAG's full year results in 2012 referred to, amongst others, the "strongly impressive pricing on the transatlantic with fourth quarter RASK [revenue per available seat kilometre] up 9.7% at constant currency".The analysts also pointed to "signs of life in long haul premium demand, while non-premium pricing is developing well and continued commitment to restructuring Iberia (€270m restructuring charges booked)." "We make modest changes to our estimates; estimated 2013 underlying EBIT [earnings before interest and tax] rises 2% to €606m (IAG guidance over €485m)," they added. As well, they see the structural benefits demonstrated by transatlantic trends (incl. the planned AMR-US Airways merger), bmi integration completion and imminent Iberia headcount reductions as de-risking the future and hence raise their TP [Target Price] by 14% to 295p.IAG's share price was up 0.08% to 238p at 12:03 on Monday.MF