Thursday, December 1

IAG shakes off the bearish yoke

IAG shares chained a rebound of nearly 10 percent in two sessions, driven by a general movement of advances in the tourism sector.

This strong volatility is the trend that has dominated the sector since the appearance of the omicron variant of coronavirus.

The new strain of Covid-19 threatens to delay the recovery of IAG’s business until 2023, but the latest news casts a ray of hope on the tourism sector and airlines.

Added to this is the strong accumulated oversold. The Eurostoxx 600 Travel & Leisure it remains the worst sector indicator in Europe for the year, encouraging investors to look for opportunities among the worst-hit companies.

News flow encourages IAG and the tourism sector

The bullish start of IAG was driven by a confluence of positive news for the sector.

Scientists in the United Kingdom have a study ready that indicates that people who are infected with the omicron variant are less likely to develop a serious condition than with the delta strain, according to advanced ‘Politico Playbook.

According to this source, omicron aims to be clearly lighter. The point is that it is also much more transmissible, so there is still a risk of collapsing hospitals and unleashing more restrictions on mobility.

On the other hand, the sector was quite optimistic about the approval by the US FDA of the drugs from Merck y Pfizer against the coronavirus, considered the biggest milestone against the pandemic after vaccines.

Furthermore, the fact that the Administration Biden has decided to deploy a pharaonic plan against omicron without forcing new restrictions on mobility was also valued by the market. And the same did Boris Johnson in the UK, at least until after Christmas.

Analysts start talking about soil in airlines

The combination of heavy accumulated punishment and more positive news led some brokers to forecast better prospects for airlines.

“The omicron floor for airline stocks could be close,” said British bank economists HSBC about.

In the opinion of these experts, travel restrictions should become more predictable once there is a scientific consensus on the threat of the variant in the coming weeks.

In the same line, Nannette Hechler-Fayd’Herbe, Chief Investment Officer at Credit Suisse WM told Bloomberg Television that it is too early to judge omicron’s impact on economic growth.

In addition, this expert suggested that there could be a strong recovery in the travel sector.

IAG breaks bearish guideline

This floor that analysts speak of in the airline sector was already done by IAG in the 1.48 euros that marked the minimum in December. From this area, the rebound of the Iberia matrix is ​​almost 13 percent.

Thus, the price of IAG it broke the short-term bearish guideline that brings the value from the last relative highs of November.

Now, the key to rebuilding the advance structure is at 1.72 euros, he explained Jose Luis Herrera, Analyst at Global Investment Bank (BIG). This level is only 3 percent away.

The analysts consulted agree that IAG needs to consolidate levels in this area of ​​1.7 euros. Not far away, at 1.78 euros, it has an average of 50 sessions. Recovering this level would be an important short-term support.

Everything will depend on the flow of news about omicron. By fundamentals, the analyst consensus still sees a potential rebound of 47 percent.

Since mid-December, at least half a dozen research houses have reviewed their IAG valuations, and none of them set a price target below 2 euros. The market has faith in the comeback.