Introduction: So, a strong bullish push for IAG shares.
IAG the parent of BA, Iberia and many other European airlines has been soaring high in the stock market of late. The share price of the company has a clear and unambiguous upward trend in the last one year or so and recently touched a 52 week high. With travel demand surging post-pandemic and IAG’s solid financial recovery, many are wondering: will IAG shares keep rising to higher high or it is time for a correction.
In this article we aim to analyze the current share performance of IAG, investigating the driving forces for this company as well as evaluate if it can reach the 260p, thus be seen as an attractive acquisition for investors.
A Solid Year for IAG: Reasons That perpetuate The Bull Market
IAG has had a good year due to many reasons. The group was able to realise increased operating revenues due to the increase in air travel demand, increased passenger traffic, successful cost containment measures, and increase in operational efficiency. Here are the primary elements contributing to its bullish trend:
Strong Travel Demand: One event that has especially benefited from the lifting of COVID-19 restrictions is travel. This is good news for IAG, which has seen flights getting back to where they were in terms of pandemic level in many of its markets. Notably, the transatlantic routes have been popular where British Airways’s main source of revenue, originated.
Operational Improvements: IAG has, therefore, been striving to integrate various processes and reduce various expenditures hence increasing the profit margins. Lead by example: The group has commissioned best practice methodologies in optimising its fleets and implementing data driven methods to its advantage to enhance the organisations profitability level.
What’s Next for IAG Shares?
Despite IAG’s solid performance, investors are wondering if the bullish momentum will continue, especially with the stock recently hitting new highs. To understand what lies ahead, let’s take a look at some potential headwinds and tailwinds for the airline giant:
Market Sentiment: With broader market volatility driven by economic uncertainties, especially related to inflation and interest rates, IAG’s future price action may depend on investor sentiment. If global economic conditions remain strong and air travel demand persists, IAG could see continued growth.
Fuel Costs: As with many airlines, fuel prices are a key concern. While IAG has taken steps to hedge against price increases, rising fuel costs could hurt margins if they continue to climb. This remains one of the significant risks for IAG’s earnings.
Competition and Geopolitical Factors: Airlines are constantly facing competitive pressure, particularly in the European market. IAG will need to ensure it maintains its competitive edge in such a crowded field. Moreover, geopolitical risks, such as the ongoing war in Ukraine, could affect international travel and disrupt IAG’s routes.
Will IAG Break 260p?
Recent developments saw IAG’s stock reach its 52 week high; the next major level of resistance is 260p. This level has been in the past a key psychological level for the share price of IAG which has seen analysts and investors place their focus on whether or not it will be able to pierce through this level.
Technical Indicators: From the current technical point of view, the trend of IAG remains on the upside as the stock forms higher top structure. If IAG manages to break above the 260p level, there will be another level of resistance at 280p, and further upside looks realistic, depending on the firm’s fundamentals.
Analysts’ Predictions: Some of the analysts have offered a bull note on IAG and others have predicted that there is more room for the stock to go up if the current situation persists. However, care must be taken since stock is volatile, and other conditions can easily alter a stock’s position in the market.