Despite being down over 4% on Wednesday, International Consolidated Airlines (LON: IAG) shares have seen strong gains in the past month, rising from a low of around 136p
IAG shares have had a particularly tough time during the pandemic, tougher than other airline stocks because one of its key routes is London to New York.
In March 2020, then US President Trump widened the US travel ban to include the UK, which saw its shares close the next trading day down 27%, with their low point during the pandemic coming at around 86p. That travel ban has been in place until the US announced last month that it will be removed in November.
In mid-September, IAG shares were trading at 136p, but since then, they shot to a high of 193p before a recent drop-off in the rally.
The rise followed the news that the US would allow vaccinated travellers to enter the UK and Europe starting in November. This is vital for British Airways owner IAG, with British Airways earning nearly $1.2 billion from NYC to London between 2018 and 2019.
Following the reopening announcement, Virgin Atlantic reported a 600% rise in bookings to the US, while British Airways reported a jump in searches for routes across the Atlantic.
So, where could IAG shares be heading? Well, if you have seen the recent Best Travel Stocks To Buy or the Best Stocks To Buy Now articles, you will know I have been watching IAG and the US travel story for some time. Pre-pandemic, IAG's stock price was trading around the 410p level.
While I see its shares continuing to make gains, it will be a long-term hold, and a while before we see it at its pre-pandemic levels. This is because demand for travel to and from the US will need to be sustained over the long term, but it can become pricey for travelers due to the vaccination and testing requirements. The reason for IAG shares falling on Wednesday is due to reports that the US reopening to UK and European travellers may be delayed.
However, when it comes to IAG's stock price, Wall Street analysts seem to share a similar view as myself, with 6 out of 8 analysts surveyed by TipRanks giving a Buy rating in the past three months, with an average price target of 217.9p.
While there are still risks for IAG (such as the potential for delays, as mentioned), it does seem as though now it, and other travel stocks, are on a more positive path.
Is Now a Good Time to Invest In IAG Shares?
Travel stocks, including IAG shares, have been severely impacted by the coronavirus pandemic and subsequent travel restrictions. Hotels, airlines, cruises, and car rental companies have all been affected, but could now be a good time to buy travel stocks at a discount? Are IAG shares included on our list of the best travel stocks to buy? Here's what our analyst had to say on the issue…
