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The International Consolidated Airlines Group (LSE: IAG) share price is flying right now. Over the last year, it has roughly doubled.
Looking ahead, City analysts expect the stock to continue moving higher. Here’s a look at the average share price target for the airline stock.
Business momentum
The group, known as IAG, has a lot of momentum right now. For example, in August, the company posted an operating profit of €1.68bn for the second quarter of 2025. This was up from €1.2bn a year earlier and miles ahead of the consensus forecast of €1.4bn. In other words, performance was much better than expected.
“We continue to benefit from the trend of a structural shift in consumer spending towards travel. We remain focused on our market-leading brands and core geographies, where we continue to see robust performance“, commented IAG CEO Luis Gallego at the time.
City analysts are bullish
Given this business momentum, analysts expect the share price to keep rising. At present, the average price target among the 22 brokers covering the stock is £4.52.
That’s roughly 13% above the current share price. Add in dividends and investors could be looking at a 15% return over the next 12 months or so, if that share price target is achieved (it may not be, of course).
That’s probably a better return than the FTSE 100 will deliver over the next year. The average return from the UK’s large-cap index over the last few decades – with dividends included – has been around 6%-7% per year.
Is the stock worth a look?
Is this a no-brainer investment, then? I’m not so sure – I see pros and cons of owning this stock.
On the plus side, people continue to spend heavily on travel despite the cost-of-living crisis. This trend could continue in the years ahead as cashed-up Baby Boomers retire and travel the world.
Another positive is that the stock remains cheap. Currently, it trades on a forward-looking price-to-earnings (P/E) ratio of about seven. That compares to P/E ratios of 10 for US airline operator Delta Airlines and nine for Australian airline Qantas.
On the downside, there are a lot of things that can go wrong for airlines. Rising fuel prices, terrorist attacks, wars, supply chain issues, and higher-than-expected capital expenditures are some examples.
One other issue is that these companies are always spending money to keep their planes in the air (which translates to lower profits and can limit share price gains). In the past, Warren Buffett has used the term ‘bottomless pit’ to describe the airline industry’s relentless demand for capital.
Better opportunities in the stock market today?
Weighing everything up, I personally think there are better opportunities in the market right now. IAG shares could keep rising in the near term but, taking a five-year view, I reckon investors could see higher returns in other stocks.
