The Motley Fool

IAG share price: Does the Pfizer vaccine news change anything for me?

Image source: Getty Images.

Does the Pfizer vaccine news affect my thinking around IAG (LSE:IAG)? The IAG share price has benefitted from the news of a potential Covid-19 vaccine. Last week, Pfizer and BioNTech announced preliminary analysis showed their vaccine could prevent more than 90% of people contracting the virus. Approximately 43,000 people took part in tests. One of the leading professors said he expected further analysis to show the vaccine would reduce transmission between people as well as stop symptoms developing in someone who has had the vaccine.

So what does that mean for IAG’s prospects? Well, in my opinion, not a lot has changed for me and I will explain why.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

IAG share price woes

Covid-19 has hit few sectors harder than air travel. It has single-handedly managed to wipe out thousands of jobs and uncountable billions of revenue. In February, prior to the market crash, I could buy shares in IAG for 432p per share. Fast-forward a month later and its price had tumbled nearly 70% to just 133p. It’s price lowered even further in May where the beleaguered airline’s shares were available for 115p.

When the crisis first began, IAG remained steadfast in its confidence of overcoming the difficulties that lay ahead. It expected its liquidity levels would be sufficient but that was just not the case. Over the past few months IAG has raised billions from investors just to keep the lights on. This does not bode well for the longer term prospects in my opinion. Despite the encouraging news from Pfizer and BioNTech we are still some way from normality resuming and I think the IAG share price rise is a knee-jerk reaction.

Airplane mode

IAG is pretty much on airplane mode for me in terms of investment viability. In simpler terms, like my phone on airplane mode, IAG is pretty much redundant.

The short term indicates the IAG share price may continue rising. However savvy investors should look towards the longer term. The airline industry is very capital intensive. It costs ridiculous amounts of money to invest in, keep, run, and maintain a large fleet of planes.

A Q3 trading update at the end of October made for abject reading. There were two key financial takeaways for me that stood out. Firstly, revenue was down 66% compared to the same period last year. In addition to this, net debt had risen 46%, which is worrying. There were some silver linings in an increased flight programme compared to Q2 and over 1,000 extra cargo planes used to distribute emergency supplies.

Plane and simple

I am indifferent when it comes to airlines. This global pandemic has taught me a lot about airline stocks and the industry. At this point I would not invest any of my hard-earned money in IAG.

Warren Buffett once said, “The worst sort of business is one that grows rapidly, requires significant capital to engender growth, and then earns little or no money. Think airlines.”  When Warren Buffett speaks, I usually listen.

The IAG share price and its prospects longer term aren’t something I would be interested in right now. Instead, I would look at other alternatives with better prospects.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Jabran Khan has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.