With the IAG share price at 100p, is it a buy?

IAG (LON: IAG) share price crashed to the lowest level since November 2020 as concerns about cost rose. The shares have collapsed by more than 38% this year,  meaning that they have underperformed the FTSE 100 and FTSE 100 indices. 

British Airways in a holding pattern

IAG Group is one of the biggest companies in the aviation industry in Europe. The company owns brands like British Airways, Iberia, and Aer Lingus among others.

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Like other aviation companies, investors had high expectations for IAG in 2022. For one, the Covid-19 pandemic was ending and demand was rising. However, the reopening has been more challenging than expected.

While demand has been elevated, investors have been concerned about the company’s cost of doing business and cancellations. Jet fuel has risen by more than 50% this year while the company warned that it will cancel 10,000 flights during the winter season.

Soaring interest rates is also a major concern for IAG, considering that the company borrowed heavily during the company has over 13.3 billion euros. As such, the firm will need to spend more money paying its debt.

Still, there are some catalysts that could push IAG share price higher in the near term. First, jet fuel prices have been in a downward trend lately, with Brent falling to $84. This means that the company will likely have higher margins in the coming months.

Second, business travel has rebounded in the past few months. This is important since British Airways is one of the leading players in intercontinental business travel. Third, demand for flying has remained high even as prices have surged recently. 

Therefore, while airline stocks are usually bad investments, there is a likelihood that the company will do well in the coming months.

IAG share price forecast

The daily chart shows that the IAG stock price has been in a strong bearish trend in the past few months. In this period, the stock has formed a descending channel pattern that is shown in green. It has also moved below the 25-day and 50-day moving averages while the Awesome Oscillator has moved below the neutral level.

Therefore, from a technical perspective, IAG shares will likely continue falling as sellers target the next key support at 90p. A move above the resistance point at 105p will invalidate the bearish view.

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Source: https://invezz.com/news/2022/09/28/with-the-iag-share-price-at-100p-is-it-a-buy/