The International Consolidated Airlines Grp SA (LON: IAG) share price has risen 24.11% since the year began but is currently trading below its recent lows. The positive price action has left many wondering whether the airline’s share price will continue rising.
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Deutsche Bank recently downgraded the airline group’s forecasts for Q3 2023, citing the recent decline in air fares compared to previous expectations of the airfares remaining constant. The company’s stock came under intense selling pressure following the downgrade.
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Analyst Jamie Rowbotham said: “We have seen some weakness in our fares data, with 60-day out prices for travel in August having screened 2% down year on year on average, and walk-up fares in June 6% down.”
Rowbotham noted that the bank was exercising caution regarding airline stocks, despite most airlines not highlighting a decline in airfares as a critical factor within their latest earnings results. The analyst cut the September forecasts but left the December forecast intact.
The Deutsche Bank analyst also downgraded other airlines, including Air France-KLM and IAG, from buy to hold while lowering the two airlines’ price targets from €2.3 to €1.85 and from 200p to 165p, respectively.
Rowbotham also expects airfares to decline in 2024 by about 6% compared to this year. The analyst’s previous expectation was for airfares to remain the same next year. However, not all airlines received a downgrade from the analysts.
The bank maintained a buy rating on easyJet plc but slashed its price target to 585p from 635p and retained a hold rating on Wizz Air with a reduced price target of 2,850p, down from 3,700p. The analyst retained a buy rating on Lufthansa with a price target of €11, down from €14.5.
IAG shares have fallen recently, and it remains to be seen whether they will keep falling following the recent downgrade and the expected decline in airfares that could hit its topline and bottom-line results.
*This is not investment advice.
IAG share price.
The IAG (LON: IAG) share price has risen 24.11% since the year started. Will the rally continue?
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