IAG Share Price is Slowly Making a Comeback. Is it a Buy?

IAG share price has attempted crawling back as investors focus on the aviation industry. Shares of the British Airways parent company rose to a high of 121p, which was about 20% above the lowest level this year. However, the price is about 45% below the highest level in 2021, giving it a market cap of about 6 billion pounds. 

IAG return to profitability

IAG shares have recovered slightly as investors cheer the ongoing demand for flying. In July, the company said its operating profit for the second quarter was over €293 million. Its operating profit before exceptional items rose to €287 million. As a result, its profit after tax and exceptional items rose to €133 million. 

This happened as the passenger capacity in the second quarter rose to 78% of 2019 capacity from 65% in the first quarter. As a result, passenger unit revenue rose by 6.4%, while the total load factor reached 81.8%. Notably, its total liquidity increased to €13.4 billion, with total cash reaching €9.19 billion. In a statement, IAG expects pre-exceptional operating profit to be significantly higher than expected.

Most importantly, IAG share price has recovered as investors focus on the ongoing performance of crude oil and jet fuel. Crude oil has fallen from the year-to-date high of $135 to a low of about $90. And analysts expect that prices could continue falling in the coming months. As a result, IAG will likely being more profitable this year.

IAG share price forecast

The daily chart shows that the IAG stock price dropped to a low of 102p in July this year. This was an important price since it was along the lower line of the descending channel. The stock has now recovered and is at the middle point of the channel. It has also moved slightly above the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has moved slightly above the neutral point of 50.

Therefore, IAG will likely continue rising as buyers target the upper side of 141p. A move below the support at 110 will invalidate the bullish view.

iag share price