European airline stocks have staged a strong recovery recently as demand rises amid recession fears. IAG share price has soared by over 20% in the past three months. It has outperformed the closely watched JETS ETF, which has risen by less than 10%. The stock was trading at 133p on Tuesday, close to its highest point in May.
Aviation is thriving
The aviation industry is thriving as people go back to traveling. In the United States, data compiled by TSA showed that this year’s Thanksgiving was a busier day for air travel than in the same period in 2019. The agency screened 2.25 million people on Tuesday, higher than those it screened on the same day before the pandemic.
Further, hedging has helped companies like British Airways deal with soaring fuel prices. Another key factor is that business travel is rebounding at a faster rate than expected. A report published in August showed that business travel will move to pre-pandemic levels by 2026, two years earlier than the previous forecast.
I suspect that the recovery will happen sooner than these estimates. A boom in business travel will be a positive thing for British Airways, which is a leading player in the industry. Further, IAG share price has rebounded because flight cancellations have reduced in the past few months.
Another catalyst for the stock is the ongoing row between British Airways and Heathrow Airport. This week, it was reported that the firm was considering doubling its operations at Gatwick Airport. Gatwick is seen as a cheaper option considering that Heathrow bosses are pushing for an increase in landing fees.
Analysts are relatively bullish on IAG stock. Those at Bernstein and UBS Group expect that the stock will rise to 180p and 165p, respectively. Deutsche Bank and Goldman Sachs see the company’s shares jumping to 140p and 136p, respectively.
IAG share price prediction
The daily renko chart shows that the IAG stock price has been in a strong bullish trend. Renko is often seen as a better alternative to candlesticks since it removes the noise of time. The stock has moved slightly above the 25-day and 50-day moving averages.
A closer look shows that it has formed a descending channel pattern shown in orange. It is now slightly below the upper side of this pattern. Therefore, in the near term, there is a possibility that the stock will retreat as sellers target the middle of the channel at about 125p. A move above the descending channel will signal that there are more buyers willing to push it higher.
