IAG share price forecast ahead of earnings: buy or sold?

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on May 3, 2023
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  • IAG stock price has been in a consolidation phase in the past few weeks.
  • Focus shifts to the upcoming IAG earnings scheduled on Friday.
  • Analysts expect that company’s revenue jumped in the first quarter.

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IAG (LON: IAG) share price has hit a wave of turbulence as the market reflects on the state of the aviation sector and the recent quarterly results by US airlines. After soaring to a high of 173.65p on February 3rd, the shares have pulled back to the current level of 147.60p. The stock remains about 65% above the lowest level on October 3rd.

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British Airways earnings ahead

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IAG, the parent company of British Airways, Iberia, and Aer Lingus, has been in a tight range since April as investors reacted to earnings by American airlines. These companies published generally strong results as demand for aviation jumped.

For example, Delta’s revenue jumped by 36.9% year-on-year to over $12.8 billion. The company also boosted its forward guidance citing strong forward summer bookings. Meanwhile, United Airlines reported strong results as revenue soared by 51% YoY to over $11.43 billion. 

The same is true with American Airlines, a leading company in the industry. In its report, the company said that its revenue jumped by 37% to $12.2 billion. Other airlines, including Southwest, Qantas, and Alaska Air published strong results.

Therefore, while all these companies are different, they are good indicators of what to expect when IAG publishes its results on Friday. Analysts expect the results to show that IAG had an operating loss of 173 million euros in the first quarter. 

In its last financial results, the company hinted that its Q1 capacity will be ~96% of its 2019 levels. For the year, the firm expects that its operating profit before exceptional items will be between €1.8 billion and €2.3 billion.

IAG share price forecast

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IAG share price

IAG chart by TradingView

In my last article on International Airlines Group, I predicted that the shares would continue consolidating ahead of its earnings report. This view was correct as the shares have remained in a tight range for weeks. The shares remain slightly above the key support level at 141.50p, the highest point on November 11.

As a result, the stock is moving at the 50-day and 25-day moving averages. The Awesome Oscillator has moved above the neutral point. Volume has remained relatively low. Therefore, at this stage, the outlook for the stock is neutral ahead of earnings. A move below the support at 141.50p will signal that bears have prevailed. In all, the support and resistance levels to watch will be at 141p and 160p.

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