Here’s why the IAG share price fell 26% in March
The International Consolidated Airlines (LSE: IAG) share price was on what looked like a cracking recovery. But then, in March, the shares dropped by 26%.
And it’s actually a bit worse than that, as IAG shares are now down 29% from the 52-week high of 368.4p set in early February. I saw worse, but that’s relative and might only matter to short-term traders. Though 2025 isn’t off to a great start, the shares are still up 48% over the past 12 months.
Strong 2024 results
With full-year results released on 28 February, CEO Luis Gallego said: “We are particularly pleased to announce that IAG is proposing a final dividend which takes our total dividend for the year to €435m and intend to return up to a further €1bn of excess capital to shareholders in up to 12 months.“
The company saw a 9% rise in revenue, with operating profit before exceptionals up 26%. And it reported €3,556m of free cash flow, after investing €2,816m into the business.
Who wouldn’t be happy with that? Well, the tumbling share price since that day shows the possibly unexpected answer.
As well as 28 February being results day, it’s also the day I saw a quote that will stick with me. It’s from David Dimbleby at the BBC, who said: “I thought the free market was with us forever — then Trump came along.“
Tariff pain
If there’s one economic lesson that politicians have learned from economists, it’s that free trade benefits everyone. And import tariffs hurt everyone. That approach has played a large part in the huge rises in global wealth since the end of World War II.
Some new predictions suggest US inflation could push back up above 5% now. And Goldman Sachs just upped its estimate of the chance of recession to 35%.
International Consolidated Airlines is due to report first-quarter figures on 9 May. Could we see a bit of caution creeping in? Falling demand? Luxuries like air travel are among the first to go when people are feeling the pinch.
Virgin Atlantic has already told us it’s started to see signs of slowing US demand. I fear it might just be the start.
Broker outlook
Deutsche Bank has just reiterated its Buy stance on the stock with a 400p price target. That’s a 53% premium to the price at the time of writing. Some individual targets are higher, though they might be getting a bit stale now.
But Barclays issued a downgrade a couple of weeks ago to Underweight. That seems to be jargon for ‘nah, we think it might go down.’
Someone ignoring the headline hype and just looking at forecasts could see the IAG share price as cheap. Forecasts put the shares on a price-to-earnings (P/E) ratio for the current year at only five. Net debt of €7.5bn takes the edge off that, but it still looks low.
I do think investors could do well to consider the stock at this valuation. And I reckon it’s trade-war fear that’s knocking the share price down now. My take? The airline business is open to just too many risks for me.
The post Here’s why the IAG share price fell 26% in March appeared first on The Motley Fool UK.
But this isn’t the only opportunity that’s caught my attention this week. Here are:
5 Shares for the Future of Energy
Investors who don’t own energy shares need to see this now.
Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.
While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions,
he says. Mark believes 5 companies in particular are poised for spectacular profits.
Open this new report — 5 Shares for the Future of Energy
— and discover:
- Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
- How to potentially get paid by the weather
- Electric Vehicles’ secret
backdoor
opportunity - One dead simple stock for the new nuclear boom
Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!
More reading
- 2 reasons why I’m avoiding cheap IAG shares in April!
- At a P/E multiple of 6, is this FTSE 100 stock a no-brainer buy to consider in April?
- FTSE shares: an opportunity to secure generational wealth?
- What’s going on with IAG shares as Heathrow shuts?
- Down 20% since February despite excellent 2024 results, is IAG’s share price set to soar again?
Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
