Wizz Air - Starts To Look Like A Hazard Game
- We downgrade Wizz Air to Neutral from BUY, reflecting the increasing dilution risk as the stock starts to look like a hazard game. In the same time, we reduce our TP to 28 GBP/sh from 30 GBP/sh, reflecting some changes to our estimates following Q1 presentation and limited short-term visibility. Our new TP implies an 8% upside to yesterday’s closing price.
- Wizz Air became a playground for short sellers as shares have been on the roller-coaster this year. First, the market had started to price in a bad case scenario due to the war and spiking oil prices, whereas now rather looks to be focused on LT strategy. However, we are of the view that dramatic moves are driven by short selling rather than fundamental drivers. Since our upgrade dated back to 30 June, the stock has risen by an extraordinary c.40% within about one and a half month, thus valuation of Wizz has simultaneously recovered from extreme cheap levels, in line with our expectations.
Wizz Air Holding is a European airline. As of Mar 31 2017, Co. provided more than 500 routes from 28 bases, connecting 141 destinations across 42 countries. Co. has two reportable segments: the airline and the tour operator business units, marketed under the Wizz Air and Wizz Tours brand names, respectively. Wizz Air sells flight tickets and related services to external customers and, to an extent, to Wizz Tours. Wizz Tours sells travel packages to external customers covering the network of Wizz Air.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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