The IAG share price has retreated as some investors start to take profits. It has dropped for three consecutive days and moved to the current 326p, down from the year-to-date high of 367p. It is still one of the best performing FTSE 100 constituent after soaring by 260% from its lowest level in 2023. So, will the IAG shares soar after earnings?
Why IAG share price has retreated
The IAG stock price has dropped sharply in the past few weeks. This decline is likely because investors are taking profits after the stock almost doubled in 2024. It is not uncommon for stocks to pull back after rising so fast in a certain year.
The stock has also pulled back in sync with other airline companies. United Airlines stock, which surged in 2024, has dropped by over 15% from its highest level this year. Similarly, Delta stock has pulled back by 16%, while American Airlines stock is down by almost 20% from its highest level this year.
Therefore, the ongoing airline stocks crash is likely because of the profit-taking among investors who benefited as they soared. It is not uncommon for stocks to take a breather after surging during a certain period.
Read more: IAG share price has surged: will it fly or sink in 2025?
IAG is doing well
The IAG share price has pulled back even as the company continues to do well, helped by its differentiated business model. The most recent results shows that the company’s revenues rose by 7.9% in the third quarter. Its operating profit rose by 15.4% to €2.01 billion, while its operating margin kept rising. IAG’ revenue rose by 7.9% to €9.32 billion.
The company is seeing robust demand across all its brands like British Airways, Aer Lingus, and LEVEL. Demand rose by 1.2% in the third quarter, and the management expects the trend to continue as airfares moderate. This helps it to boost its load factor to about 90%.
IAG’s management has improved its balance sheet by ensuring that its leverage is about 1%. It is also adding to its fleet and improving its customer service.
The company is also capitalizing on its highly profitable transatlantic route. Its Aer Lingus brand initiated new flights to Denver, Minneapolis, and Indiana. The other brands like British Airways and Iberia are doing the same.
All this has helped IAG to boost its payouts to shareholders. It paid an interim dividend of €0.3 and initiated a €300 million share buyback.
The next key catalyst for the IAG share price is its earnings, which will come out on Friday. Analysts expect that the company’s operating profit will be between €641 million or €996 million. The median estimate is €754 million.
IAG share price analysis
IAG stock chart by TradingView
The daily chart shows that the IAG stock price has been in a strong uptrend in the past few years as the civil aviation industry bounced back. It has pulled back in the past few days as investors wait for its earnings.
The stock has remained above the 50-day Exponential Moving Average (EMA), a sign that bulls are in control. Therefore, there is a likelihood that the IAG stock price will bounce back, and possibly retest the key resistance point at 367p. A move above that level will point to more gains, potentially to 400p. A drop below the 50-day moving average level at 320p will invalidate the bullsh view.
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