Can IAG's share price reach 250p in the next year? Here's what the experts say

I AG (LSE: IAG) share price is up 50.6% over the past 12 months. Investors who saw its potential will be glad they bought it, or kick themselves for failing to do so. Sadly, I'm in the latter camp.

Like all major airlines, British Airways' owner IAG took a nosedive during the crisis, with fleets grounded during the shutdown. They still had to pay their big fixed costs, and many had huge debts to do it. IAG's forecast for the end of 2024 is still £8bn in debt. That's just under today's market cap of £10.5bn.

Total debt equaled its share price even after people started flying again. Given all this turmoil, it's no surprise that IAG shares are still trading 36.8% lower than five years ago. However, this suggests that there may be an opportunity for recovery here.

IAG shares were among the lowest prices FTSE 100 for some time now. Even after the recent turbo-charged performance, they still trade at just 5.06 times trailing earnings. Only a few blue-chips are cheap, as measured by the price-to-earnings (P/E) ratio.

Can this FTSE 100 stock keep flying?

IAG also looks good value with a price to sales ratio (P/S) of 0.4. This suggests that investors pay 40p for every £1 of sales the company makes.

However, airline ticket prices have fallen recently, as demand has stabilized but supply has increased. Today's operating ratio of 11.9% is forecast to drop to 11.7%. So the sky is not completely clear.

Besides, sellers are always happy. A hefty 25 analysts offer one-year price forecasts for IAG, setting an average target of 250.4p. That's an impressive 16.46% rise from today's 214p.

There is always a wide range of predictions, especially with many buyers giving their opinions. The default orientation is 170p, while the maximum is 450p. That last forecast would see IAG's share price more than double. I'm not sure if investors will be that lucky, but it's nice to see a lot of hope.

Good value and growing profit too

There's a lot to like in IAG's first-half results. Sales rose 8.4% to €14.7bn, although profit before tax fell 1.1% to €905m. The board is the balance sheet “strong”with liquidity jumping 42% to €9.7bn on 30 June.

Free cash flow reached €3.2bn and finally, profits are returning. It is recovering rapidly again, with a forecast yield of 2.87% for 2024 rising to 3.86% in 2025.

Much depends on the world economy, of course. China continues to struggle but there is hope that the US can develop a soft economic recovery. As ever, a natural disaster or regional war could crash IAG's share price overnight. Airlines are often at the forefront of Black Swan events. The good thing is that the price of oil has been falling, reducing fuel costs. It may start to rise more often.

The first phase of any share price is usually the best, and I don't miss it. However in the long term, I would expect an increase in the number of shares and more dividends. Analysts are happy and IAG shares still look cheap. I will buy them as soon as I can get the cash together.