Financial Trading Blog

Stock of the day 09/05/2016 – TUI AG



With the global terror threat continuing to impact business how will TUI fare when it reveals its half year report on Wednesday?


After managing to sneak a few pounds higher by the end of a tumultuous 2015 things initially looked good for TUI as 2016 began, climbing to a 3 month high of £12.86 by the middle of January. Yet investors soon turned on the travel company, the stock plunging below £12 as February got underway.

TUI’s performance became even worse after it revealed its first quarter report on the 8th February, a 40% fall in Turkish holiday bookings (a big blow given that the destination made up 14% of its passengers last summer) and warnings of a similar slowdown in Egypt sending the stock 4% lower. That headline news overshadowed a fairly decent set of figures, TUI managing a 5.4% jump in Q1 total sales to €3.7 billion and a €3 million reduction in its underlying losses to £102 million.

TUI AG Chart May 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 09/05/2016)

Despite a brief recovery across the back end of February the stock couldn’t break the £11 mark, and by the 23rd March was languishing at a 2016 low of £9.57. Yet TUI saw a mini-turnaround with its end of March trading update, customers’ decision to shift away from Turkey to Spain and the Canaries causing a 2% rise in overall bookings and a 3% jump in revenue for its 2016 summer programme.

This helped TUI briefly graze £11, though it couldn’t maintain its post-update growth, and a rocky few weeks has left it at a current trading price of £10.25 (IT-Finanace.com, 09/05/2016).

In terms of its update this week, investors will be looking for TUI confirm its on track to meet its oft-repeated target of a 10% rise in full year underlying earnings, whilst providing an outline for what it will do with the $1.2 billion the company made from the sale of Hotelbeds to Cinven at the end of April.

TUI AG has a consensus rating of ‘Buy’ with an average target price of £12.68.



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