(Bloomberg) -- The owner of British Airways should be trading at more than double its current share price, according to Panmure Liberum.
IAG SA’s valuation is “wholly unreflective” of the firm’s strong return on capital and margins that are double those of its peers, Panmure Liberum’s Gerald Khoo said.
He’s set a price of £5 ($6.44) as his target compared with around 240 pence where the stock trades now. That’s more than 50% above that any of the other 33 analysts covering the owner of Britain’s flag carrier, which Khoo said has seen a “huge” improvement in profit.
British Airways’ strength in North-Atlantic routes underpinned a jump in the group’s quarterly profit, he wrote, adding that the firm will continue to benefit from easing disruption around air-traffic control and deliveries of Airbus SE and Boeing Co. aircraft.
Khoo also raised his earnings estimates by 16% to 10% per year through 2026, citing improving fuel costs.
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