Will Saga shares meet resistance if Covid-19 restrictions are extended?

The Saga share price has fallen almost 1% in the last five days, with an extension to the UK’s Covid-19 restrictions looming. The over-50s cruise operator will be hit by further delays to increasing onboard capacity.

  • Saga shares down 0.88% in the last 5 days
  • 77% year-to-date price rise
  • 77% capacity booked for 2021/22 summer cruises
  • Monthly cash burn approximately £7m-9m
  • Ready to trade the Saga share price? Open an account today

Is the Saga share price starting to demonstrate bearish tendencies?

Since the turn of the New Year, the Saga share price has experienced almost one-way traffic upwards. From a baseline of 230p in early January, Saga shares reached highs of 419.80p on 8 June. However, despite this 77% year-to-date rise, there are signs that this short-term recovery may have peaked.

In the last five days, the Saga share price has fallen 1.12% (as of 10 am on 14 June), with significant resistance appearing in the 420p region. Despite the recent upturn in fortunes, it has been a dismal last five years for the cruise operator and insurer, losing 85.40% of its value during this period.

Does Saga have contingency plans in place for further delays?

With the current level of Covid-19 restrictions in the UK set to be extended by a further four weeks, this decision will hit Saga and the rest of the cruise industry hard. The cruise company had planned to resume cruises from 27 June.

Fortunately, the company has confirmed it has contingency plans to enact if the restrictions are extended by Prime Minister Boris Johnson on 14 June. These include operating with smaller guest capacities.

The operator has been inundated with demand for its 2021/22 summer cruises, with bookings at approximately 77% of available capacity - 48% of available capacity already booked for the 2022/23 summer season.

How do its insurance arm and balance sheet affect the view of Saga shares?

It has been a turbulent few years for Saga, with its original owner Sir Roger De Haan forced to bail out the business with a £100m share acquisition, giving him a 20% stake in Saga today. Since that bailout, and Saga’s 2019 share price crash – causing the company to lose half of its value – restructuring has been a necessity.

More than a third (36%) of staff have been made redundant, helping to reduce overall losses by almost 80%. Although travel bookings are up 20%, its insurance, vehicle, and home policy sales are due to be largely flat in H1 2021. Its fixed-price three-year policies account for more than two-fifths (43%) of sales of all Saga insurance products.

The other primary concern is the company’s dwindling cash reserves. As of 31 May 2021, Saga’s cash reserves totalled £78m. In addition, it holds approximately £823m of debt on its balance sheet. Although its loans do not need repaying imminently, if the company cannot return to profitable trading, it is possible that further finance will be required to service existing debts.

Despite this bleak outlook, Saga’s CEO Euan Sutherland believes the company is making ‘strong progress’ and meeting ‘all the pillars of [its] turnaround plan’.

‘In Travel, the resumption of sailing for both ships and restarting Tours remains the priority, whilst, in Insurance, we aim to deliver consistent performance,’ added Sutherland.

Go long or short with the Saga share price today

Take your position on UK shares for just a small initial deposit with CFDs.

Open an account to start trading or investing in UK shares.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.