Broker snap: Deutsche Bank, Nomura stay positive about IAG

14th Aug 2013 09:50

Shares in British Airways owner International Consolidated Airlines Group (otherwise known as IAG) were trading higher on Wednesday morning after some comments from Nomura and Deutsche Bank who both reiterated their 'buy' ratings for the stock.Nomura raised its target price for the stock from 283p to 335p, saying that the company shows the "best restructuring momentum" amongst European airlines."With the recent results, IAG demonstrated the benefits of its restructuring, with the prospect of more benefits to come from the Iberia mediation as more employees leave the company," Nomura said.The broker said it sees IAG's drive for improved performance as "credible" which should boost the shares higher along with earnings momentum.Deutsche Bank also stayed positive over IAG, keeping a 360p target price, despite Tuesday's news that the US government is looking to block the merger of US Airways and American Airlines' parent company AMR Corp due to competition concerns.Deutsche Bank said that amongst European airlines, this news is most relevant for IAG given that the company has an anti-trust immunised transatlantic joint venture (JV) with AMR - a merger would have seen more volumes flow through this JV."We know this JV is extremely profitable, and hence the increased flows would likely have been a sizable positive. Hence this is a negative," the broker said.Nevertheless, analysts pointed out that IAG's 2015 EBIT target of €1.6bn is not reliant on an AMR-US Airways merger.The broker said: "So whilst we think the merger would have helped drive upgrades to this target, we are clear that it is not explicitly part of the target. Hence we would position this as an event which does not change the fundamental buy case (restructuring of Iberia) but does make one of the upside positives more difficult. In our view IAG remains a core BUY."The stock was up 0.47% at 322.1p by 09:48.BC