TUI Q1 results: where next for the share price?

The Anglo-German travel and tourism operator will unveil its first-quarter results next week, with Barclays Capital trimming its price target for the stock ahead of its earnings update.

TUI will unveil its first-quarter (Q1) results on Tuesday 11 February, with investors hoping the company can deliver a strong set of quarterly earnings and help the stock rebound from early losses it has suffered in 2020.

The travel and tourism operator has seen its share price tumble more than 17% since the start of the year, with the company’s shares being hit hard by the Chinese coronavirus. However, analysts from HSBC believe the sell-off is ‘overdone’.

HSBC also said that investors’ ‘should look past’ concerns regarding the impact grounded Boeing 737 Max planes will have on TUI’s performance.

Analysts from HSBC, therefore, have upgraded their rating for the stock from ‘hold’ to ‘buy’, with the bank stating that while its ‘shares have fallen circa 10% since the company reported its FY19 numbers… we believe this is overdone, especially given recent news from smaller, private operators commenting that booking momentum for 2020 is improving’.

All eyes on 737 Max’s return

TUI expects full-year 2020 underlying EBIT to be between €950 million - €1.05 billion, which includes an approximate €130 million cost impact from the 737 MAX grounding, assuming a scenario whereby the MAX returns to service by end of April 2020.

However, in the alternative scenario, where the ban on the 737 MAX is not lifted in time for a return to service by end of April 2020 and TUI must plan for a continued grounding for the remainder of the of this year, the group assumes a further cost of between approximately €220 million - €270 million.

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Barclays trims TUI shares outlook

Analysts from Barclays Capital reiterated their ‘equal weight’ rating for TUI but trimmed their price target for the stock to 850p.

Based on the stock closing at 813p a share on Tuesday, analysts from Barclays Capital believe TUI has a potential upside of 4.5%.

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