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Ok, so the DJ Index is staging a recovery from last Friday, with the US Airlines making solid gains today. I am expecting an upward movement now for the next 2 or possibly 3 days on IAG, according to my charts, and then something of a retrace once again. I think this will open up strongly tomorrow and then will see what it reaches by mid-morning. If there is heavy buying, this may reach £2.50 to £2.60 by 10.30am before cooling off. Possibly reach £2.90 by the end of the week and then I expect to see downward movement back to £2.20 levels just prior to FY Results on 25 July. But who knows, I could be completely wrong with this prediction!
Looks like there will be no material increase in the price of this share in anticipation of, or once air bridge news is confirmed. Market sentiment seems to be on a downward trend at the moment , and I think the negativity we are now seeing in the world markets far outweighs any green shoots of recovery. Whilst it is tempting to buy into IAG at the current price, I think there are good enough reasons to hold off at the moment and get in when it hits the £1.60 to £1.80 range. IMHO, this will happen by the end of July, when their Q2 results and cash-burn are communicated to the markets - both are going to be quite bad.
Once again, this sector shows signs of weakening further and as previously predicted, the share price here will slowly continue to drift downwards, with the occasional small uplift along the way. I have bought and sold shares in this stock over the years since Brexit and have done quite well in achieving capital growth and dividends, but sold my stocks just as Covid was starting to gain traction - which proved to be a good decision! Whilst it is always tempting to buy back into this stock, I am patiently waiting for a few weeks as I expect this stock to hit £1.60 to £1.70 once more. There will be no material uplift in the stock once "air bridges" are officially announced next Monday, as this news is widely known. The Q2 and HY1 results will be "a shocker" and the share price is likely to plummet temporarily on this news (IMHO). That is when I am hoping to reinvest, as from that point onwards.......the news can't get any worse!
Hmm, it is not looking too good once again today with market sentiment quite negative now that Covid-19 is spiking in many more countries as well as the global economy predictions seemingly under-estimated based on news flows this morning. I see this share dropping into the 210's later today, perhaps even slightly lower. I'm now looking at £1.70 to £1.80 before considering any investment here. There is no need to buy at these levels, as I expect further "bargain" opportunities to come along in the next few weeks.
@TMT
Maybe cross wires here, I didn't say to wait until the airlines are profitable before investing back into IAG, but more solidly financially structured in the Balance Sheet - ie through equity issue / rights issue / renegotiation of debt with lenders. This is likely to be a short term exercise (in the next 6-18 months), all of which can negatively effect the share price of a company. In this industry, competition will become stronger with airlines competing with a lower number of passengers, therefore revenues and profits will decline until passengers become more confident of travelling safely and feeling safe in another country. All airlines will need to scale back quite dramatically, and it will be a completely different industry. IMHO, gone are the days of IAG being £5 or £6 a share for many years (ie - not a short term investment, but a much longer one if you want to tie capital up for a long time).
Interesting how so many PI's think this share will "take off" (pardon the pun) later this week when air bridges are officially announced. These have been talked about for quite a while and will have already been factored into the share price. In fact, the like of RYA and EZJ will be the main beneficiaries of this, due to IAG having reliance on their long-haul services for most of their profits. Sure, IAG will pick up some revenues from this, but not anything material in value. Also, capacity levels will be very, very low for the next 2-3 months IMHO, and as so heavily documented, profitability in general in this industry will not come back for 1-2 years at least. This will stagnate or lower the share price and there would be no dividends either. I do think the best advice is to "wait and see" with this, as many airlines are going to have to sure up their balance sheet with share dilutions / extra funding lines in the near future. Once these financial measure are then in place, it will make the airlines more robust and fit for the future, but alas, I only see more downward movement here before a slow recovery back.
As expected, and via my previous posts, the share price is continuing its slow decline back to realistic levels. This could well level off around the £2.20 to £2.40 mark over the next 1-2 weeks and then I expect a lower level following a rights issue / share dilution, which is being muted by in the press and on media channels. I would think IAG may well issue a statement on this close to, or just after their Q2 and HY1 results, later in July. From researching at the weekend, the R-rate is at 2.88 in Germany in places, following their lockdown reduction measures, and IMHO this will also increase the R-rate in this country about 2-3 weeks after we reduce our own lockdown measures. I believe the dreaded "second spike" is now more likely than not, going to happen and this will again negatively affect the economy, jobs.....and of course, the stock markets. I hope that I am wrong with this, but I think the "smart money" is to hold onto your spare cash and re-invest at expected lower levels.
So, we now know that IAG are re-strategising their business model to take into account the current climate and when airplanes do start flying again, that customer demand is likely to be slow to gather momentum, for both social and business use. Is there going to be a future share dilution of say 10 or 20% so that IAG can bolster its balance sheet whilst repaying some of the emergency Covid loans / funding? IMHO I do not see IAG making any profits over the next 24 months or so, quite possibly not until 2022 at the earliest. What effects do people think this will have on the share price in the next 12 months?
This does not look good to me. I don't see any bounce in the share price any time soon as the world economies are waking up to the fact that the recovery is not looking like it will be swift, as previously thought. Quite a lot of reading on-line about second spikes of Covid now popping up and this could further delay the airlines in particular in getting back to business. This is how most of the virus cases spread in the first place. IMHO I see this going back below 200p within the next week or two, perhaps even reaching a new low if there are further delays with the return to flying schedules. Once Summer has passed, people will be thinking even less about wanting to fly.
Good feedback, and I can certainly see a few more "sell-off" days over the rest of this week and next. This share has had a huge uplift from £1.60 in mid-May up to £3.60 in the last couple of days. I think it will continue to drift a bit more down to £2.40 to £2.70 range before it increases once more. I was lucky to get in at £2.50 and sell at £3.27 a week ago and so took my profits. Waiting for this level of entry point once again before dipping back in, by which time hopefully more information about air bridges will be known. Main thing for IAG here is to get their long-haul back on track, but I don't see that happening anytime soon IMHO. Also, keen to know what will be resolved about the BA Employees new contracts.......and before you know it, BREXIT will be back spooking the marketplace!
Looks like we are heading for something of a "perfect storm" with this, IMHO and who knows which direction this is heading. We are likely to be entering into one of the heaviest recessions for a long while; furloughing due to finish in a few months time and the impact on employment is an unknown; airlines are soon to be flying again (hopefully) but it seems at a much lower capacity than before; will there be a second-spike of Covid; Q2 results are not likely to look too pretty. I think this one is a wait and see for now and then re-look around August time when more is known.