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Investing.com -- European transport stocks are showing promising growth potential for 2026, with freight forwarding and airline companies leading the sector, according to a recent JPMorgan analysis.
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The investment bank has identified key players that are well-positioned to deliver strong performance despite varying market conditions.
DSV and International Airlines Group (IAG) stand out as the top contenders in the European transport sector, with both companies demonstrating resilient business models and strategic initiatives that could drive significant value for investors.
DSV
The Danish freight forwarding giant tops JPMorgan’s list with a compelling investment case. DSV is accelerating the integration of Schenker, now targeting 30% completion by 2025 and 70% by 2026, significantly ahead of previous timelines.
The company has negotiated an earlier integration in Germany, with implementation set for January 1, 2026, substantially shortening the previously expected two-year social constraint period.
JPMorgan values DSV with a price target of DKK 2,130, based on a blend of DCF and EV/EBIT multiples. The shares trade at less than 15x 2027 estimated P/E, which analysts view as attractive given the forecasted 28% forward EPS CAGR between 2025-2028.
The company’s asset-light business model, performance-driven culture, and focus on free cash flow are expected to enable an earlier resumption of its share buyback program, potentially starting in 2027.
IAG
The parent company of British Airways, Iberia, and other airlines is the second JPMorgan top pick for 2026.
IAG is expected to benefit from improving revenue and cost trajectories heading into Q4, with underlying pricing improvements driven by strengthening Transatlantic US economy point-of-sale and year-over-year decreases in ex-fuel cost per available seat kilometer.
JPMorgan highlights IAG’s favorable supply-demand dynamics among European flag carriers, particularly in the UK-US market where capacity is projected to decrease in coming quarters.
The company is maintaining some of the highest margins in the sector, expected to reach approximately 15% in 2025, with potential upside into 2026 driven by the BA transformation program.
With a strong financial position (JPMorgan estimates 2025 net debt/EBITDA at 1x), analysts anticipate a new share buyback announcement at the full-year 2025 results in early 2026, potentially amounting to €1.5 billion or 8% of market capitalization.
JPMorgan’s December 2027 price target for IAG is €6, based on target multiples applied to 2028 forecasts.
Both companies face sector-specific challenges, including potential market volatility and competitive pressures, but JPMorgan believes their strategic positioning and self-help initiatives provide a buffer against broader industry headwinds.
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