Monday, August 15

Pins take IAG shares

The actions of IAG they are still held with pins. The value has just marked the worst downward streak in 22 years and although this Tuesday it recovered some air in the stock market, the sources consulted believe that the situation remains very uncertain.

In these ten days of declines, the group lost 17 percent of its value due to the fear that the new restrictions forced by the coronavirus further delay the recovery horizon.

It is the general trend in the tourism sector, which is even more complicated in the case of the airline, one of the most lagging students in the class.

Unlike other European airlines, such as Lufthansa or Air France, which have slowed the red numbers in the third quarter, IAG is still losing money. This year it will go to 3,000 million euros, according to its own projections.

For Joaquin Robles, XTB analyst, it is a relevant circumstance. “It has accumulated red numbers for more than 9,000 million euros since the pandemic began and has had to make two debt issues, in addition to a capital increase,” explained this expert.

Less demand in the sector

To the problems of IAG are added those of the sector, which remains at half gas. And no good news is expected.

The increase in Covid-19 cases and restrictions “points to a reduction in passenger demand from European short-haul airlines and the need for very competitive rates to fill planes,” Bloomberg Intelligence analysts told .

From the outset, these experts foresee a lower demand until Christmas, mainly due to the restrictions in countries such as Germany, Austria or the Netherlands.

IAG looks closely at the precipice

While the block of fundamental analysts skeptical of IAG continues to grow, the experts in the interpretation of charts also do not see many green shoots, not even after the punishment inflicted by the company.

The entire market is pending a key area in IAG, 1.6 euros, a fundamental support.

From here “prices rebounded strongly in mid-September, corresponding to 61.8 percent of the Fibonacci retracement of the previous bullish leg,” he said. Jose Luis Herrera, Analyst at Global Investment Bank (BIG).

There is a distance of just over 10 percent to this critical zone, when the company has dropped 17 percent in days of relentless selling pressure. Along the way, he has lost the average of 50 and 100 sessions, two important references to open sales operations.

The battle between bulls and bears in the 1.6 euro area is expected to be intense. “There is very strong support here,” said the technical analyst. Roberto Moro. It is the area that stopped all falls in September.

30 percent drop target

The problem that can arise in IAG would come if it loses this area of ​​1.6 euros. “I would be more concerned because we can go to much lower levels, perhaps up to 1.2 euros would be the most relevant and dangerous areas,” said Robles.

If you lose the area of ​​1.60 euros at the weekly close, “you can go to the origin of the movement, between the euro and 1.20 euros,” added Herrera. And the target of falling to 1.2 euros exceeds 30 percent from current IAG levels.

Unless the general set of markets deteriorates, Moro believes that IAG’s falls could be halted at 1.6 euros. But if he lost this area, this expert believes that then it would be necessary to open short positions in IAG.

From above, Robles considers that IAG’s situation will not improve until the company recovers at least 2.2 euros per share.