Source: Sharecast
The bank started coverage of IAG at 'overweight', noting that it holds a dominant position at London Heathrow, controlling over half the slots and ensuring access to the world's largest premium and corporate travel hub. "This advantage has supported resilient premium demand, helping offset softer US leisure travel trends," Morgan Stanley said.
It pointed out that IAG was set to expand its share in the profitable transatlantic market, with limited competition at LHR sustaining pricing power. "Cost transformation efforts, new-generation aircraft like the A321XLR, and customer experience reinvestment are expected to further improve margins," it said.
The bank, which set IAG a €5.50 price target, also said consensus expectations for FY25 EBIT appear conservative, with upside from stronger pricing, lower fuel costs, and better unit cost performance.
"Current estimates for fuel and CASK ex-fuel may prove cautious, with management’s guidance suggesting more favourable outcomes, and MSe EBIT is 6% above Visible Alpha consensus for 3Q25 and FY25," it said. "Beyond 2025, fleet renewal and digital initiatives should reduce costs and support strong margins and returns on capital. With robust cash generation, a solid balance sheet and enhanced shareholder returns, IAG shares are likely to rerate above historical averages, supporting an overweight rating."
Analysts at Berenberg raised their target price on facilities manager Mitie Group from 175p to 185p on Wednesday following the group's interim trading update, in which it confirmed continued strong trading momentum in the first half of FY26.
Berenberg, which reiterated its 'buy' rating on the stock, noted that Mitie's H1 trading update showed that revenue growth was strong across the group, driven by pricing and higher project volume.
Looking ahead, the German bank stated the prospect for further growth was underpinned by Mitie's strong order book and its "impressive bidding pipeline", which now stands at a record £31bn.
Berenberg also highlighted that Mitie's strong H1 performance, continued momentum and progress with its integration of Marlowe had provided the company with the confidence to resume its buyback programme, with the launch of a £100m programme, which it will execute over the next 12 months and bring the cumulative total of buybacks to £303m since FY23.
"We make minor adjustments to our numbers and incorporate the planned £100m buyback to our model, resulting in an uplift to our EPS forecasts and an increase in our price target to 185p," said Berenberg.
