IAG Share Price Soars on Stellar Q3 Earnings and Upgraded Analysts’ Outlook

IAG share price has been the best-performing stock on the premier FTSE 1OO index for the past two trading sessions on the back of stronger-than-expected earnings. The London Stock Exchange-listed airline stock has jumped by more than 13% since Wednesday and is up by 33.67% in the year to date.

Record Profits

IAG share price has staged a significant recovery for the past few days against the backdrop of better-than-expected earnings and improved analysts’ ratings. International Consolidated Airlines Group SA, the parent company of British Airways, Aer Lingus, and Iberia, reported record profits last week for its third quarter ending June 2023 as resilient demand for travel and high ticket prices buoyed the industry’s recovery.

IAG reported revenue of £7.69 billion for the three months ending June 2023, up from £5.89 billion in the second quarter ending March 2023 and a 30% year-on-year rise. The company’s net income of £1.01 billion, an increase of 657.89% compared to a year earlier. Operating profit came in 240% higher Y/Y at £1.25 billion, while the cost of revenue climbed 17.31% Y/Y to £5.83 billion, up from £4.84 billion in the previous quarter.

According to the Anglo-Spanish airline company, demand for flying remained strong, with no reports of weakness in forward bookings. The company’s rival, Air France-KLM also reported rising revenues and a record operating margin for its second quarter. Other airlines, including Ryanair and EasyJet, also reported record earnings amid the booming demand for travel despite the weak economic backdrop in Europe.

In its report, IAG stated that strong leisure demand offset the slowdown in recovery for corporate travel in Q3. Passenger numbers also increased in the quarter as demand for long-haul travel rebounded. Airline revenues were also boosted by the customers’ willingness to pay high ticket prices, which have increased in the wake of airlines’ increased costs and elevated consumer demand amid an industry-wide shortage of planes.

Barclays raised its target price on International Consolidated Airlines Group SA on Monday to 2.45p, down from 2.30p. The brokerage also raised IAG’s FY23 operating profit estimate by 13% and maintained its “overweight” rating. Data by Refinitiv shows that 17 analysts have a current average “buy” rating on the stock.

IAG Share Price Forecast

The daily chart shows that the IAG share price has been on an upside price correction for the past few days, climbing above the 20-day and 50-day exponential moving averages. Its Relative Strength Index (RSI) moved higher to 66, indicating a rise in buying pressure.

As such, the IAG share price is likely to continue moving higher in the medium term as buyers target the immediate resistance level at 173.60p. If this happens, the next support level to watch will be 180p. On the flip side, a flip below the 50-day EMA at 157.95p will pave the way for further losses.

IAG Price Chart

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