I rarely expect to see analysts bullish about the International Consolidated Airlines (LSE: IAG) share price.

But most of them are tipping the stock as a Buy now. And the average 12-month price target’s around 243p.

With the price at 211p, as I write, that would be a 15% gain. Add in a 2.4% forecast dividend yield, and if it comes good the way they suggest, we could have a nice total return.

Even better

Looking around, I’m even seeing some high-end targets of 450p and above. Do I think the IAG share price will more than double in the next 12 months?

It might sound like a few heads are up in the clouds with the planes. But a 450p share price would push the price-to-earnings (P/E) ratio, based on FY 2024 forecasts, only as far as 9.7.

I think that might be too optimistic in the current economic climate, and considering the cyclical volatility of the airline business. But I can’t call it outrageous.

The current share price means a forward P/E of only 4.6. And that has me scratching my head and thinking the shares might be way too cheap.

But wait…

These P/E estimates don’t include debt, and I think we need to adjust for that. At the interim stage at 30 June, net debt stood at €6.4bn, or £5.4bn at the current exchange rate.

International Consolidated has a market-cap of £10.3bn at the moment. Adjusting for that, we’d see an equivalent P/E of seven. And at the top-of-the-range share price target we’d be looking at close to 15.

The extent to which debt should effect our take on a stock valuation should depend on the nature of the company, I think. Some work better under debt funding than others.

BT Group, for example, has been carrying very high debt for years. But it seems to keep the earnings flowing in and the dividends flowing out, and the cost of debt servicing isn’t that high. As long as that continues, shareholders seem happy enough.

External risk

But a company like International Consolidated Airlines faces numerous external risks. By that, I mean things that are beyond its control. Like fuel costs, pandemics, economic slumps, world politics…

And it doesn’t have the safety fallback of providing essential services — taking a flight is far more of a take-it-or-leave it decision.

It’s because of these risks that I’ve never bought airline shares. But then, when I look at that P/E of only 4.6 (and still only about half the FTSE 100 average when adjusted for debt), I can’t help seeing International Consolidated as a Buy candidate.

Debt falling

The debt’s coming down too, dropping 30% in the 12 months to June. And the board’s set “a target to remain below 1.8x net debt to EBITDA before exceptional items“.

So will I buy? Probably not, because I still don’t like airline risk. I just see more Footsie stocks out there look safer. And pay bigger dividends.