BA owner IAG 'most compelling' overweight in airline sector, says JPM

(Sharecast News) - BA and Iberia owner IAG flew higher on Wednesday as JPMorgan Cazenove said it was the "most compelling" overweight in the airline sector and added the stock to its Analyst Focus List and put it on "positive catalyst watch". JPM said this was driven by solid pricing, strong free cash flow leading to shareholder cash returns and a re-rating potential.

More broadly, the bank said 2025 is expected to be a mixed year for the transport sector.

"We see a weakening backdrop for trade despite volumes in air and ocean freight being well below the normalised level," it said. "The main pocket of earnings growth may come from the European airlines given a fuel tailwind and resilient pricing sustained by a benign demand-supply balance."

JPM said its best ideas for 2025 focus on self-help, as it added overweight-rated transport and logistics firm DSV to its Analyst Focus List ahead of the closing of the Schenker acquisition expected in the second quarter of next year.

It maintained its overweight rating on DHL, but removed the stock from its Analyst Focus List, saying it sees the growth trajectory in 2025 as "less clear".

JPM said it remains negative on container shipping as it sees the most downside earnings risk over the next 24 months. It reiterated its underweight rating on Maersk, despite EBIT losses now pushed out to 2026 given persisting external events masking the structural oversupply challenge.

At 0945 GMT, IAG shares were up 3.2% at 272.90p.