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Investing.com - UBS downgraded International Consolidated Airlines Group (LON:ICAG) SA (LON:IAG) (OTC:ICAGY) from Neutral to Sell on Wednesday, while simultaneously raising its price target to GBP3.50 from GBP2.85. The airline group, currently valued at $23.32 billion, has shown remarkable performance with a 149% return over the past year, according to InvestingPro data.
The downgrade comes despite UBS recognizing IAG as "the best of breed European long haul network operator," a status reinforced by the airline group’s first-half 2025 performance and supported by its "GREAT" financial health score of 3.51 on InvestingPro.
UBS cited four specific concerns that led to the rating change, including "likely slowing momentum in profit growth or indeed reversal" and "North Atlantic yield progression" issues.
Additional factors behind the downgrade include concerns about the "UK economic backdrop" and potential impacts from "changes in Avios loyalty program" on future demand, though UBS noted evidence for this last concern remains "so far unfounded."
The firm’s analysis concluded that share price risk for IAG is "skewed more to the downside" despite the higher price target, which was determined based on new forecasts and the analyst’s existing valuation methodology.
In other recent news, International Consolidated Airlines Group (IAG) has received positive attention from multiple analyst firms. Bernstein upgraded IAG’s stock rating from Market Perform to Outperform, citing favorable industry trends and a constrained aircraft supply that supports the sector’s supply-demand balance. Bernstein also raised its price target for IAG to GBP4.50. Additionally, CFRA has lifted IAG’s stock rating from Buy to Strong Buy, maintaining a price target of GBP4.00. CFRA’s upgrade is based on a forward price-to-earnings multiple of 7.4 times the company’s projected 2026 earnings per share, highlighting IAG’s strong post-pandemic recovery and improved balance sheet. The firm also noted IAG’s strategic diversification across leading European carriers as a factor for its premium valuation. These developments reflect growing confidence in IAG’s financial performance and growth prospects.
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