Thursday, December 9

The list of brokers afflicted with IAG continues to grow

While IAG shares continue to struggle to recover the psychological level of 2 euros, the list of brokers afflicted with the company does not stop increasing.

Recently, Berenberg pundits lost faith in the stock after more than three years recommending buying his stocks, and so did analysts at Peel Hunt.

To this group of brokers concerned with the matrix of Iberia the economists of JP Morgan, which lowered IAG’s target price to 2.25 euros, from 2.45 euros previously calculated.

IAG faces major challenges

“There are still important challenges,” they argued at the US bank to justify their decision to reduce the expected earnings per share for the next two years.

Specifically, they cut earnings per share for 2022 by 28 percent and by 11 percent in 2023. Rising oil prices are behind this downward revision.

What’s more, JP Morgan recalled that IAG’s leverage is still “very high”, compared to some low-cost groups, such as Easyjet, Ryanair O Wizz Air.

Oil continues to scare analysts

Still, the US bank cut its earnings-per-share estimates for the entire sector because of crude oil. This is the new variable that is depressing airlines, along with the delta plus variant of the coronavirus.

The problem they detected in JP Morgan For all the companies they cover, it is that they will only be able to pass on to their customers a part of the increase in fuel.

It’s a reason strong enough to overshadow other big news, like the end of flight restrictions in the United States. And in these circumstances, no good news is expected.

“Over the coming winter, we believe that the sector is unlikely to break out of its current downward trend,” added JP Morgan.

British Airways clouds good news from the US for IAG

The market has high hopes for the end of the restrictions on the United States. “The outlook for IAG could improve significantly,” explained analysts from Bloomberg Intelligence.

The problem is British Airways, which accounts for 66 percent of the group’s ebitda. “It is lagging behind its peers and we believe that sales and margin may not rebound to pre-pandemic levels until at least 2023,” the sources consulted explained.

Rising costs and low demand for business travel, which charge higher rates, pose challenges for margins.

Iberia cedes with Air Europa

Another china in the group’s shoe is the purchase of Air Europa by Iberia, which is getting more and more complicated. This Thursday, the European Commission reported that IAG offered a series of concessions to regulators to carry out the operation.

Brussels did not provide further details on these concessions but extended the deadline to decide on the agreement until next January 4.

In March of last year, IAG signed an agreement with Volotea to sell several of its routes in Spain and increase competition in the national market. The group tried to allay regulatory concerns but did not provide further details on the routes.

IAG must recover the 2.2 euros to improve its trend

The truth is that the noise generated around the Hidalgo family airline did not help to sustain the IAG price either.

As if that were not enough, the market expects Iberia’s parent company to present losses of 2,700 million euros until September, with multiple threats in sight.

In any case, the technical analysts consulted by considered It is essential that the value first recovers the psychological level of 2 euros. And higher, it will be important to overcome the resistance of the 2,2 euros to regain the uptrend.