IAG: Dominant Heathrow Moat And Buybacks Will Drive Future Upside

Analysts have modestly raised their price targets on International Consolidated Airlines Group, lifting the consensus by about GBP 0.25 per share as they highlight the companys improving fair value, slightly higher future earnings multiples, and strengthened competitive position at London Heathrow, even as long term growth and margin assumptions remain broadly stable.

Analyst Commentary

Recent research updates on International Consolidated Airlines Group reflect a predominantly constructive stance, with several bullish analysts lifting price targets and reiterating positive ratings as they reassess the group’s earnings power and competitive positioning.

Given the generally positive skew of the latest notes, market views can largely be grouped under bullish takeaways, with only limited explicit caution emerging at this stage.

Bullish Takeaways

• Multiple bullish analysts have raised their price targets into the 500 to 620 GBp range, indicating greater confidence that current earnings momentum and balance sheet repair can support a higher medium term valuation.
• The uplift in targets is underpinned by expectations that IAG can sustain premium yields and load factors at London Heathrow, where its dominant slot position is seen as a durable competitive moat supporting returns on capital.
• Fresh Overweight and Buy stances describe IAG as a preferred play in European airlines, with potential upside cited from both network rationalisation and further post pandemic cost discipline translating into margin resilience.
• Analysts highlight scope for improving free cash flow generation, noting that deleveraging, potential shareholder returns, and disciplined capacity growth could justify higher earnings multiples versus historic averages.

What's in the News

• IAG completes a major share buyback tranche, repurchasing 85,096,976 shares between July 1 and November 5, 2025, and finishing a total 5.14% buyback for €950 million under its February 28, 2025 program (company filing).
• The Board approves a gross interim cash dividend of EUR 0.048 per share against 2025 results, with payment from December 1, 2025, and an ex dividend date of November 27, 2025 (company filing).
• Citi raises its IAG price target to 620 GBp from 390 GBp and reiterates a Buy rating, citing improved earnings outlook and valuation support (Citi research via periodical).
• Morgan Stanley initiates IAG with an Overweight rating and EUR 5.50 price target, naming the airline group its top pick in European airlines due to its dominant London Heathrow position (Morgan Stanley research via periodical).

Valuation Changes

• Fair Value, expressed per share, has risen slightly from roughly 4.66 to 4.68, indicating a marginal uplift in the modelled intrinsic valuation.
• Discount Rate has increased modestly from about 10.08% to 10.17%, which implies a slightly higher required return applied to IAG’s future cash flows.
• Revenue Growth assumptions have edged down marginally from around 3.28% to 3.26%, indicating a slightly more conservative top line outlook.
• Net Profit Margin expectations have eased slightly from close to 9.93% to 9.91%, signalling a small downward adjustment to long term profitability assumptions.
• Future P/E has risen slightly from roughly 7.89x to 8.02x, reflecting a modest rerating in the multiple investors may be willing to pay for IAG’s forecast earnings.