Sharecast - The broker said a more favourable fuel cost outlook and resilient demand drive material upgrades to short-term estimates.
"Supply chain bottlenecks constrain the industry’s ability to add excess capacity, underpinning both strong unit revenue trends and our optimism on the outlook," it said.
"A stronger earnings outlook translates into faster organic leverage reduction. We consider IAG’s rating to not reflect its undiminished strategic positioning."
Liberum said that on its revised forecasts, which are "admittedly above consensus", IAG (LON:ICAG) trades on a 2023E price-to-earnings of 6.1x (fully diluted) and EV/EBITDAR of 3.7x, falling to a 2024E P/E of 3.8x (fully diluted) and EV/EBITDAR of 2.9x.
"We consider this valuation to be consistent with late cycle multiples, rather than the relatively early-stage recovery from the pandemic that IAG is in," it said.
