EUR 400.00 For Business Accounts Only

IAG: WE CONTINUE TO SEE HIGH UPSIDE POTENTIAL (ANÁLISIS BANCO SABADELL)

We continue to see high upside potential. We lower our T.P. to € 2.40/sh. (-6% vs. previously). BUY.
The stock has performed poorly recently (-10% in absolute terms and -12% vs. IBEX), mainly affected by the Air Europa (AE) acquisition agreement and the existing doubts on debt overhang after the Covid-19 pandemic. We do not think the company’s financial position is a problem, neither on the side of debt maturities, nor in terms of interest rates or covenants. Moreover, the estimated impact from the acquisition of Air Europa will not be a game changer, resulting in a +0.3x increase in the NFD/EBITDA ratio’24 BS(e) (to ~2.2x NFD/EBITDA’24 BS(e)). We have fine-tuned our 2023-25 sales estimates BS(e) by +9% vs. previously in view of the higher prices, but cut our 2023-25 estimate by -20% due to cost inflation and fuel (+23% vs. previously). As a result, we cut our T.P. to € 2.40/sh. (-6% vs. previously) and reiterate our BUY recommendation. We see three catalysts: (i) the company’s results, which should reflect strong demand and balance sheet from 1Q’23 on; (ii) the drop in crude oil prices; and (iii) the CMD, which we expect to take place in the 2H’23e.