MARKET REPORT: Airline stocks soar as analysts say travel industry is set for a good summer despite ongoing economic turmoil
Airline shares rallied higher as analysts said the travel industry is set for a good summer despite the ongoing economic turmoil.
Barclays told customers that rising inflation and rising interest rates are unlikely to deter people from taking vacations.
Rather, airlines should take advantage of consumers willing to spend the money they saved during the pandemic on experiences such as ski trips and city breaks.
“Macro concerns weigh on this sector, but we believe European travel demand will remain strong throughout the summer,” Barclays said.
It issued a series of target price upgrades, increasing Easyjet from 510p to 570p, British Airways owner IAG from 165p to 170p and Wizz Air from 2400p to 2450p.
Taking off: Barclays told customers that rising inflation and rising interest rates probably won’t prevent people from taking vacations
Easyjet and IAG were also raised to ‘overweight’ from ‘equalweight’ but Wizz Air was kept at ‘underweight’. While Barclays expects all three to report losses in their next updates, it said results should be much better than the same period a year earlier when Omicron was in business. And airlines should also benefit from lower fuel costs and a weaker dollar.
An alert was issued about industry-wide challenges related to ground handling occupation, airport security and air traffic control.
Easyjet rose 3.5 percent, or 17.4p, to 518.4p, IAG gained 1.6 percent, or 2.38p, to 150.98p and Wizz Air added 3.5 percent, or 101p, to 2973p.
The FTSE 100 rose 0.2 percent, or 11.31 points, to 7631.74 and the FTSE 250 rose 0.1 percent, or 20.56 points, to 18928.3.
London’s main stock index rose every session this week, gaining about 3 percent overall.
It ended a tumultuous month in which the FTSE 100 closed more than 3 percent amid turmoil in the banking system.
It is still 2.5 percent higher this year.
NCC investors sent a clear message when the stock plunged more than a third after it warned earnings could be lower than hoped.
The cybersecurity specialist had expected to make a profit of around £47 million for the year to May 31. But customer layoffs, the recent financial turmoil following the collapse of Silicon Valley Bank and rising interest rates weighed on the North American tech sector. As a result, NCC now expects lower cybersecurity revenues and profits of between £28m and £32m. Shares fell 33.3 percent, or 51 pence, to 102.2 pence.
Ocado added 1.5 percent or 7.8 pence to 535 pence a day after it claimed “total victory” in robot wars with a rival.
Meanwhile, Beazley rose 2.1 percent, or 12.5 pence, to 597.5 pence after UBS upgraded Lloyd’s of London’s insurer from ‘buy’ from ‘sell’ and raised its price target from 646 pence to 688 pence.
Similarly, Pearson made gains after Exane BNP Paribas upgraded the education group’s rating from “neutral” to “outperform.” Equities added 3.5 percent or 28.6p to 844.4p.
The Computacenter boss said the IT group can look forward to this year as it is not ‘nearly close’ to the same challenge as 2022. Revenue rose 28.5 per cent to £6.5bn by 2022 Earnings were almost flat (up 0.4 per cent) at £249 million. Shares were up 2.6 percent, or 54p, to 2138p.
Abingdon Health said the company has moved away from Covid-19 related work.
During the pandemic, the York-based diagnostic group launched a Covid antibody test at home.
But it now said all of its lateral flow work is non-Covid-19.
Revenue of £1.1m for the six months to December 2022 was slightly down on the same period a year earlier.
But it added sales for the year to June should be “substantially higher” than the £2.8 million it reported last year.
The shares, which floated at 96p in December 2020, rose 13.6 percent, or 0.75p, to 6.25p.