The shares of one of the most prestigious companies in the world of hydrocarbons in Spain and the world.
The shares of one of the most important aeronautical groups in Europe and the world.
IAG's stock price continues to be one of the major attractions in the stock markets in 2023.
IAG is one of the largest airline groups in the world. The company, which currently has 533 aircraft and more than 270 air routes, was presented for January 1, 2023 as one of the most interesting stocks for the first quarter, but is it really worth betting on these financial instruments? Here we tell you about it.
With regard to IAG's target price, it is always desirable to start from the advantages it presents. invest The company's stock price and the more obscure nuances that investors may have to deal with once the acquisition is completed. One of the strongest advantages of IAG shares is precisely their market positioning. This acronym represents the third-largest aeronautical group in Europe and the sixth-largest globally.
In addition, although airline securities have a more marked tendency towards volatility, the fact is that their limited liability legal regime tends to provide them with greater government assistance.
In spite of this, it is necessary to point out that, although it is true that IAG ended the year successfully recovering from a complex year, it is true that the future outlook for these securities does not enjoy the confidence of all within the main financial firms, as well as the most relevant stock market indexes in the world.
To properly understand IAG's stock price, it is necessary to understand its current situation briefly. At the time of writing, the aeronautical group's shares are offered on the world's main stock exchanges at $1.78, which makes it an ideal choice for any budget.
It is worth noting that this current price first responds in the first instance to a rally The bullish trend that began in October 2022 and has extended to the present.
Even with this, the company has experienced an extremely complex financial situation since 2020, the year in which the sanitary measures against the COVID-19 pandemic. As a result, the figure currently on display is far from its all-time high of $7.31 in 2015, with no significant factors that would allow us to imagine this figure range in the markets in the short to medium term.
As for right now, the target price for IAG stands at $1.89, a figure not too far from those seen today.
While still awaiting the annual report, which will be made public on February 24 this year, it can be said that the company, for the third quarter, reported a loss of $144 million. Although negative, these figures are welcome, given that losses have been as high as US$ 2.4 billion since the outbreak of the pandemic..
As a result, forecasts for IAG offered a picture where, for the first time in two years, International Airlines Group.
It could reach positive figures, and return to profitability, all of this hand in hand with the increase of international travelers through the air ports, and factors such as the lifting of sanitary measures in China, a fact that considerably influences the influx of international travelers.
Within IAG's share price, the expert opinion must be considered at all times. One element worth noting is that the prestigious firm Morgan Stanley has set a new target price for the company's shares, which is set at around $1.45, i.e. considerably below market expectations.
Thanks to this, the three-month positive streak came to an end. While Morgan Stanley is certainly known for its pragmatism towards the company, its statement was enough to raise doubts among investors.
It is important to take into account that the shares in question had been the subject of a rally bullish since September 2022, all thanks to market projections offered by experts such as Caixabank and JB Capital Markets, which placed its base price well above market expectations at that time, putting IAG's price at up to $2.36. In addition, earnings of up to 6.75 billion were expected, i.e. 147% above the same period in 2021.
To understand the different perspectives of IAG's price target, it is also necessary to take into account certain macroeconomic perspectives. One of the factors to take into account are the fears of recession in the global economy by 2023.
International organizations such as the World Bank and the International Monetary Forum. Factors such as political instability in Eastern Europe, the energy crisis, as well as rising interest rates in central banks around the world, postulate a complex economic environment for investments, even more so in those that depend on factors such as air traffic and the influx of international passengers.
Based on this, the fears postulated by Morgan Stanley could be shared by the rest of the financial entities. It is also worth mentioning that, within the market, large companies in the sector, such as Lufthansa, present similar realities.
Given the nature of the sector in which it operates, it is extremely difficult to make an accurate and objective IAG stock market forecast.
It should not be lost sight of the fact that airline share prices are particularly volatile. This is due to the relationship between these companies and other areas with commodities such as oil, energy, state environmental policies, as well as global growth projections at the international level.
Of course, IAG's target price fluctuates as these factors will fluctuate, some of them being quite unpredictable. Based on global growth projections of 1.7% by 2023 offered by major international organizations, the most optimistic price forecast would look as follows:
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In the study of this group's share prices, there are two clearly identifiable stages. By 2020, the company's shares maintained a relatively stable price range fluctuating around $4.8. Despite this, the company's shares suffered a sharp drop due to the WHO's global pandemic decree and the imposition of distancing measures and international travel restrictions.
By March 2020, IAG shares fell to $1.5, meaning a depreciation of up to 69.5% of their value. During this stage, the company posted losses in the millions, bringing its shares to $1.002, their lowest price. Although 2022 concluded the accounting cycle with losses, it postulates a new reality for the company, creating the expectation of recording profits for the first time in two years.
Within the latest events surrounding IAG shares, and almost in parallel to the cut in the company's expectations by Morgan Stanley, almost in parallel come positive auguries in IAG's stock market forecast by the firm J.P. Morgan.
For J.P Morgan analysts, it is possible to set IAG's target price at around $2, i.e. an appreciation of 13%. This highlights the ambiguity surrounding the value of these stocks, at least for the coming months.
At the same time, the stock market performance of the Eurostoxx 600 Travel & Leisure, has reflected in recent weeks a growing enthusiasm regarding the reopening to tourism in China, which, as is well known, was among the last governments to maintain particularly restrictive measures with respect to COVID-19.
Although this factor appears to be exogenous to the company's management itself, it opens up new prospects for IAG's flight demand in the coming months.
As has become clear so far, there are certainly many factors that can anchor the possibility of revaluation in the shares of the aeronautical group. It is widely agreed that the main concern for investors to consider is the negative macroeconomic outlook at the global level.
In addition, the prolongation of the conflicts in Eastern Europe has strong repercussions on energy prices. Until these conflicts are resolved, it is difficult to imagine a stable fuel price environment, which has a direct impact on the evolution of the company's revenues and liabilities.
Finally, it is worth noting that the share price will remain in the realm of speculation, as long as the company does not issue its annual closing report during the month of February. It is worth noting that, if the group's balance sheet is presented in line with expectations, it will be much easier to visualize which of the realities presented by J.P. Morgan or Morgan Stanley seem to be more in line with reality.
To provide answers on the possibility of appreciation in IAG's prediction, it is possible to say evaluate it from two perspectives. If one thinks from a perspective of historical highs, there seems to be no possibility of the IAG performance reaching a price above $4, neither in short nor in the medium term.
For a scenario of this nature, it is necessary that both macroeconomic and managerial factors be adjusted and maintained for a long period of time; even more so given the fact that the company has been recording losses in its balance sheet for two consecutive years.
With respect to the short term, the ambiguity in the projections for the coming months seems to make it difficult to give an objective answer; and it has been seen how large financial firms seem to go for and against this possibility.
To know when it is appropriate to invest in a financial asset, it is always advisable to start by buying securities below their initial value. However, it isn't easy to know whether the current price of $1.78 is a figure that corresponds to this characteristic. The recommendation is shared that acquiring these securities requires a sufficiently solid financial muscle highly tolerant of large market corrections. For the medium term, elements seem to support the thesis of appreciation and depreciation in almost equal measure.
Beyond the above elements that interact directly with AIG's price target, we believe that its annual report is the most decisive factor in ending the lack of consensus in the projections. For the positive projections to occur, the company's losses mustn't exceed $144 million. If this factor is met, it would give investors the necessary confidence to continue betting on its growth, with prospects that would take it to values of up to $2.
For those who are motivated by IAG's price target projections, there is currently a multiplicity of platforms and systems capable of providing access to minority investors. Among the most noteworthy platforms are:
For those who are not convinced by IAG's forecast, the market is far from being limited to this single alternative. For those who want to bet on other actions in the sector, there are alternatives such as:
One of the most attractive and best performing options so far in 2023 is American Airlines stock. American has increased the value of its shares by more than 10% as a result of an influx of passengers and above-estimated earnings in the last quarter of 2022. They are currently trading at a price of $17.08.
Another noteworthy alternative is Air France shares. The French aviation icon has seen its shares appreciate by 24.6% over the past month, making them available for EUR 1.53 per unit. It is worth mentioning that these shares are also traded on eToro.
If you prefer an alternative totally outside the travel industry, you can see our Rivian forecast.
After all the above factors, the shares of International Consolidated Airlines seem to fall into an ambiguous zone, where there are as many valid factors to bet on its appreciation as there are to expect a slight fall in the stock market.
As a result, it is necessary for investors to consider in the first instance whether they have the capacity to take on the riskThe more so given its inherent volatile nature.
IAG is one of the most prestigious companies in the aeronautical sector in the world, which is why its shares are of great interest to international investors.
Although AIG's stock market outlook is ambiguous in the short and medium term, its strong positioning makes it possible to visualize its appreciation in the long term.
From 2015 to 2019, the company delivered dividends to its investors. Despite this, as a consequence of its new reality in 2020, this practice could not be maintained over time.
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