Wizz Air Holdings (WIZZ)

Sector:

Tourism and Leisure Services

Index:

FTSE 250

1,295.00p
   
  • Change Today:
      38.00p
  • 52 Week High: 2,536.00
  • 52 Week Low: 1,161.00
  • Currency: UK Pounds
  • Shares Issued: 103.39m
  • Volume: 847,990
  • Market Cap: £1,338.92m
  • RiskGrade: 205
  • Beta: 1.01

Jefferies initiates coverage on European airline stocks

By Michele Maatouk

Date: Wednesday 30 Oct 2024

LONDON (ShareCast) - (Sharecast News) - Jefferies initiated coverage on a raft of European airline stocks on Wednesday as it argued that the market is overstating the risks.

It said the European airlines sector is pricing in 20-60% downgrades in 2026.

"The sector does face a challenging period as carbon headwinds enter the P&L and yield expansion is uncertain," Jefferies said.

"However, the market fails to recognise self-help measures and efficiency gains. Our flight plan favours exposure to new generation fleet delivery, non-flight revenue streams and turnaround opportunities."

It started coverage of BA and Iberia owner IAG and easyJet at 'buy' with price targets of 270p and 680p, respectively.

As far as IAG is concerned, Jefferies pointed to the re-rating and earnings opportunity.

"We see a resilient business as exposure to supply-constrained long-haul flights should support yields," it said.

"IAG has a small carbon headwind and benefits from its fleet upgrade plan (Airbus exposure), exposure to package holidays and a turnaround plan aimed to drive British Airways margins.

"The strong balance sheet gives optionality to continue to add brands and grow dividends."

On easyJet, it also pointed to a re-rating opportunity, saying the budget airline should benefit from its growing package holiday business, fleet renewal and self-help opportunities through optimising winter trading and ancillaries.

Ryanair and Lufthansa were both started at 'hold' with price targets of €17.10 and €6.40, respectively, while Wizz Air was started at 'underperform' with a 1,020p target price.

Jefferies said Ryanair's long term investment case is attractive, with its volume-led business model driving market share gains and cost leadership in the sector.

"This creates a highly cash generative business model, that on our cautious base case is capable of returning more than 10% of market cap to shareholders through buybacks over the next two years," it said.

"Questions around the medium term remain, however. The company should see a material cost headwind from carbon and only a small tailwind from new fleet over the next two years. With no defined cost programme, significant exposure to Boeing and a question mark around yield management capabilities, we stay on the sidelines."

As far as Lufthansa is concerned, Jefferies noted it has the oldest fleet in its coverage and the lowest margins.

"While fleet delivery should ultimately drive margin recovery, Lufthansa also has significant exposure to Boeing which could delay progress," it said.

"Question marks remain around the company's ability to negotiate better airport fees with Fraport and renegotiate labour contracts in the German business.

"We view plans to shift short-haul legacy-Lufthansa capacity to the new and more efficient AOC as a positive, but this comes with execution and market share risk."

Finally, Jefferies said it is more cautious than consensus on Wizz Air's yield and cost trajectory.

"On circa 20% ASK growth per year, we see risk that yields compress as the market absorbs additional supply," it said.

"Our FY27E EBITDA estimates are 9% below consensus, even on optimistic cost recovery assumptions."

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

WIZZ Market Data

Currency UK Pounds
Share Price 1,295.00p
Change Today 38.00p
% Change 3.02 %
52 Week High 2,536.00
52 Week Low 1,161.00
Volume 847,990
Shares Issued 103.39m
Market Cap £1,338.92m
Beta 1.01
RiskGrade 205

WIZZ Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
90.03% below the market average90.03% below the market average90.03% below the market average90.03% below the market average90.03% below the market average
72.55% below the sector average72.55% below the sector average72.55% below the sector average72.55% below the sector average72.55% below the sector average
Price Trend
73.81% below the market average73.81% below the market average73.81% below the market average73.81% below the market average73.81% below the market average
88.68% below the sector average88.68% below the sector average88.68% below the sector average88.68% below the sector average88.68% below the sector average
Income Not Available
Growth
56.05% above the market average56.05% above the market average56.05% above the market average56.05% above the market average56.05% above the market average
55.10% above the sector average55.10% above the sector average55.10% above the sector average55.10% above the sector average55.10% above the sector average

What The Brokers Say

Strong Buy 4
Buy 5
Neutral 10
Sell 1
Strong Sell 3
Total 23
neutral
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

WIZZ Dividends

No dividends found

Trades for 04-Dec-2024

Time Volume / Share Price
16:16 1 @ 1,287.00p
16:12 2 @ 1,288.00p
16:11 1 @ 1,288.00p
16:10 6 @ 1,290.00p
16:08 1 @ 1,287.00p

WIZZ Key Personnel

Chair William Franke
CEO Jozsef Varadi

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