IAG

IAG Share Price Rallies After Earnings But Risks Remain

The IAG share price is rising today even after the company delivered relatively weak results and failed to deliver a forward guidance. The stock is trading at 191p, which is 118% above the lowest level in November. The shares have risen by more than 30% this month, making the British Airways owner the best-performing FTSE 100 stock.

IAG earnings: In a report today, IAG said that it made its biggest loss ever in 2020 because of the coronavirus. The company lost more than $9 billion since it was forced to pack its planes during the year. This loss also included charges of about 3 billion euros against plane retirements.

Notably, the company, which also owns Iberia, Aer Lingus, and Vueling, did not provide its forward guidance. Nonetheless, it expects to fly about 20% of its 2019 schedule in Q1 and then increase its frequency later on.

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Still, analysts are optimistic about IAG share price. They believe that the ongoing vaccination program will lead to more flights. Also, they are confident that the firm can survive without any more fundraising. It has 10.3 billion in liquidity and about 9.8 billion euros in net debt. 

However, there are two main risks. First, analysts are talking about a commodity supercycle that could lead to higher oil prices. Such prices will hurt the low-margin business. Also, there are concerns about how fast the airline industry can recover.

IAG share price outlook

The IAG share price made a bullish breakout on February 19, when it moved above the falling channel. The stock has jumped by more than 20% since then and moved above the 200-day moving average on the daily chart.

Therefore, I believe that the stock could continue rising as bulls target the 38.2% Fibonacci retracement level at 227p, which is almost 20% above the current price. The shares could also retest 238p, which was the highest level on June 8. 

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IAG shares chart

IAG share price

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