LONDON (ShareCast) - Citigroup has lifted its target price for TUI AG from 1,150p to 1,250p but kept a 'neutral' recommendation, saying it sees no cash returns in the near term at the travel operator.
Following TUI's full-year results two weeks ago, Citi said management was "doing a good job at carving out EBITA growth (>10% per annum) in a tough market".

However, it said that this growth has come at the expense of higher capital expenditure and restructuring charges, which reduce free cash flow and lift debt.

"We now expect close to zero year end net debt for the next three-four years, rather than growing net cash balances. Apart from the dividend we see little scope for near term cash returns especially considering the c€1.4bn pension deficit and c€900m per annum rental payments," Citi concluded.

The stock was down 0.9% at 1,170p by 11:18.

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