IAG Share Upside Takes A Breather. But Here’s Why It Will Resume

Summary:
• IAG share price is still some way off its pre-pandemic levels, but its run this year and strong fundamentals mean investors can dare dream.

IAG share price receded on Wednesday, trading at GBX 213.3 after losing 0.9 percent of its value at the time of writing. The decline broke the stock’s eleven-session winning streak, which helped it gain 3.1 percent in the last month. IAG has gained 37 percent year-to-date, helped significantly by a decline in global crude oil prices.

However, despite its impressive performance this year, IAG share price is still a significant way off its pre-pandemic highs. That is a double-edged sword for the stock. While the gap exerts downward pressure on long-term investors, it also incentivises new investors to buy the stock and target the potential growth headroom.

Goldman Sachs stated this week that it expects the share price to stay on an ascending trajectory, affirming the positive growth outlook. The investment bank estimates that IAG’s free cash flow will rise significantly from €1.1 billion to €1.7 billion this year. This puts it in a good position to lay off a significant portion of its €7.5 billion debt burden. The airline conglomerate has a debt-to-equity ratio of 157.8 percent, and that has been a key limiting factor for its share price.

On the downside, IAG share price is exposed to global geopolitics, which has soured in recent weeks. An escalation in the Middle East would have far-reaching negative implications. In particular, this includes a potential spike in global crude oil prices, flight cancellation and closure of air spaces.

IAG share price forecast

IAG share price momentum favours the sellers below the pivot mark at 215.3. With the sellers in control, the first support will likely come at 212.9. However, an extended downward momentum will break below that level, and could drive the share price lower to test 210.1.

Alternatively, moving above 215.3 will signal a shift toward the upward momentum. In that case, the first hurdle will likely be at 217.0. However, a stronger upside push could break above that level, invalidate the downside narrative and potentially test 219.8.