- Summary:
- In this IAG share price analysis, we explain why the stock could soon rally as the global civil aviation industry recovers
The IAG share price has done well in the past two months as investors bet that the airline industry will soon rebound. The stock has jumped to 215p, which is 155% above the lowest level in 2020. It has gained by 33% in the past three months, becoming the second-best performing FTSE 100 stock after Entain.
What happened: 2020 was the worst year in civil aviation in decades as the coronavirus pandemic forced countries to suspend local and international travel. IAG, the owner of British Airways, was affected greatly, as evidenced by the 7.4 billion annual loss that it made in 2020. No major airline made a profit in 2020.
Why IAG shares are rising: The company’s shares have rebounded for two main reasons. First, after a year of hard work, companies like Pfizer and Moderna unveiled their coronavirus vaccine last year.
Today, many countries like the US and UK have rolled-out large-scale vaccination drives that have helped reduce the overall pace of infection. Therefore, there is hope that the disease will be defeated later this year.
Second, investors believe that the vacation industry will rebound as more people who stayed at home in 2020 start traveling again. This will see more demand for these services. Also, business travel, which is the top revenue earner for IAG will also rebound.
Therefore, while the recovery will not be a straight line, there is a possibility that this year will be better than 2020.
IAG share price forecast
Turning to the daily chart, we see that the IAG stock moved above th important resistance at 179.1 on February 23. Since then, the shares have risen by more than 20%. It is also 10% below the important resistance level at 239p. The price has also moved above the short and long-term moving averages. Therefore, the price will likely keep rising as bulls target the June high of 240p.
IAG stock chart
