Financial Trading Blog

Stock of the day 03/08/2018 – TUI AG



Will TUI need a summer holiday following next Thursday’s third quarter results?



After a false start, with the stock spiking to £16.50 towards the end of January, only to get trapped under £15.50 for much of the first quarter, things picked up quite nicely for TUI in early April. There the company kicked-off a run of form that took it all the way to an all-time high of £18.18 by 18th May.


(Source: Spreadex, 03/08/2018)

Since then, however, the stock hasn’t been so successful, quite sharply pulling back from that peak, with TUI AG now at a current trading price, and 15 week low, of £15.69 (Spreadex, 03/08/2018).

The firm’s last update came on May 9th, when it unveiled its half year figures. Group revenue was up 8.5% to €6.8 billion at a constant currency basis, with a rebound in the recently ‘subdued’ Turkey and North Africa markets, alongside strong demand from UK holidaymakers and the success of its expanding cruises division, helping sales.

The latter especially was a boost to the firm’s earnings performance; underlying EBITA in Cruises jumped 23.2%, with a 32.4% rise at Holiday Experiences and a 46% leap at Hotels & Resorts allowing TUI to trim its losses from €229.6 million to €158.6 million.

Heading into Thursday’s Q3 update, the worry is that the World Cup, and the European heatwave, will have had a negative impact on demand for the remaining unsold summer package holidays. Investors will be on the lookout for any revisions to guidance if, as reports in July suggest, that has been the case, with TUI stating back in May its looking for a 3% rise in turnover and at least 10% growth in underlying earnings for the full year.

TUI AG has a consensus rating of ‘Buy’ alongside an average target price of £16.55.

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