European Airline Shares: Analysts Make Buy/Sell Calls (IAG, EZJ, WIZZ)

In a note to clients this week, analysts at Jefferies initiated coverage of European Airlines, including IAG, Wizz Air and EasyJet, offering contrasting views on the stocks.

The firm said in a wide-ranging note that the sector is set to face a difficult period as carbon headwinds enter and yield expansion is uncertain. However, they believe the market fails to acknowledge its self-help measures and efficiency gains.

Buy IAG

Jefferies assigned a Buy rating and 270p per share price target to IAG, the parent company of British Airways, Iberia, and Aer Lingus. The firm believes that IAG's strong cost-cutting measures and optimised fleet position it well for future growth.

They added that the company is now a high-margin, multi-brand, multi-price point enterprise.

Additionally, IAG's exposure to non-EEA flights reduces its immediate carbon risk from the EU Emissions Trading System (ETS).

Buy EasyJet

Jefferies is also bullish on easyJet shares, assigning a Buy rating and 680p per share target to the low-cost carrier. The firm believes that easyJet's growing package holiday business, fleet renewal through Airbus exposure, and opportunities to optimise winter trading and ancillaries will drive growth.

Sell Wizz Air

In contrast, Jefferies has an Underperform rating and a 1,020p price target on Wizz Air. The firm is concerned about the airline's high cost and fleet disruption expected in the fiscal year 2025 due to engine groundings.

While Wizz Air has a relatively low carbon footprint, Jefferies is cautious about the airline's ability to recover yields and costs in the medium term.