After a long and laborious climb, British Airways (trading under ticker IAG) finally nears its pre-covid price level.
The owner of BA and Iberia rose four sessions in a row to hit intraday peak of 420p. This level is just 10p shy of the multi-year peak recorded on 3 Nov.
IAG’s robust advance was driven by optimism in its revenue and profit generation. The sharp rebound of IAG’s share price during the summer , post tariff announcement, was a clear testament of this bullish sentiment.
But is blistering 40 percent over the past year justified by IAG’s results?
Dark clouds are forming in the distance. UK, for example, reports 5.1 unemployment rate this week. Wage growth is slowing; job market is slacking. This will, eventually, impact travelling, especially across the Atlantic.
While falling crude oil prices may help to boost the industry’s margin, without a sustained hike in demand airlines may see revenue softening in the months ahead.
Chartwise, IAG’s chart is highlighting some resistance at 440-480p.
If prices do advance there, it means IAG has tripled from its 2024 lows. That’s a remarkable bull run and should warrant some profit locking.
In contrast, the budget airline Easyjet (EZJ) saw its share price flat-lined over the same period.
The bottom line is that long-time shareholders of IAG should continue to ride the uptrend, raise stops, and watch to trim holdings at the prior peaks, in preparation of a potential cyclical downturn.
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