IAG shares rose sharply on Wednesday morning on the London Stock Exchange following a recommendation upgrade by Deutsche Bank, which believes that the group's turnaround has only just begun.

At around 10:30 a.m. (local time), the airline's shares were up by over 2%, one of the biggest gains on a flat STOXX Europe 600 index.

In a research note, Deutsche Bank estimates that limited capacity on transatlantic routes, which account for around 40% of British Airways' sales, should support the Group's fares next year.

The research firm also cites the favorable economic outlook for the USA, the UK and Spain.

Adding to this the buoyant effect of lower kerosene prices, Deutsche Bank expects the owner of British Airways and Iberia to again exceed consensus forecasts in 2025.

The analyst has therefore raised its recommendation on the stock from 'hold' to 'buy', with a price target raised from 215 to 400 pence.

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