Friday, October 7

IAG plays the stock year

The new environment that airlines are facing following the emergence of the delta plus variant of the coronavirus and the upward rally in oil shattered IAG’s bull rally.

Iberia’s parent company has just closed a black week with falls of 14 percent. So far this year, the increases are reduced to only 5 percent, so IAG is literally playing the trading year.

Aware that the airline is going through the park, bearish investors took their pressure on IAG to maximum. Even some illustrious shortsighted men like DEShaw have just reappeared in the heat of recent crashes.

Its positioning is not a toast to the sun, as the list of brokers unhappy with IAG does not stop growing either. Among them Berenberg y Peel Hunt, the last to extend negative recommendations.

Complex situation for IAG and the airline industry

“The situation continues to be complex and the appearance of new variants leaves in the air all the good prospects of having achieved immunity at the European level,” he said. Josep Codina, head of analysis for INVERSIÓN magazine, on the market closure podcast on October 22.

“If mobility is not promoted, they are companies that can continue to suffer”, said Codina with respect to the sector. The general problem is that the airline industry remains mired in many uncertainties.

The current doubts regarding the impact that the high price of oil may have on the operating expenses of the companies are opposed to the “forecasts of economic opening,” he added. Jose Luis Herrera, an analyst at Banco BIG.

Nor are the news of an imminent rate hike at London Heathrow airport helpful. However, in the opinion of Codina, it is true that “the impact should be increasingly under control.”

IAG plays the stock market year in sensitive areas

With this complex environment, IAG shares barely rebounded 0.4 percent on Monday after steep declines last week. The point is that the value is in the most delicate areas.

The support now for IAG is in the area of ​​1.8 euros. If it loses it, “it would be completing a downward continuity pattern that could take prices down to September lows, around 1.6 euros, although there would be weaker support at 1.7 euros,” he said. Codina.

The upward stretch that started in September reached 2.2 euros. Now, “IAG is leaning on the 61.8 percent decline in the aforementioned upward stretch, so its loss could take it back to the 1.6 euro zone,” agrees Herrera.

Bounce Options for IAG

To cancel this possible bearish continuation figure, “IAG has to exceed 1.95 euros, which would be the first resistance in the short term,” says Codina.

Higher up, the psychological support of 2 euros is important, but above all, “to regain the upward momentum it has to exceed 2.2 euros,” emphasizes the INVESTMENT expert.

IAG, possibility to make a long-term portfolio

The new storm hitting IAG coincided with a retreat from fundamental analysts. In the last month, half of the experts who follow the value changed their target price, five upwards and seven downwards.

The time frame that still raises investment interest is long-term. Thus, the expert consensus of calculates a 12-month price target for IAG of 2.54 euros, yielding a potential upside of 37 percent.

“Perhaps it could be interesting to take advantage of these moments of correction to build a portfolio in the medium and long term, because people continue to want to travel and move,” he stressed Codina.