Wizz Air - Smiles When Others Cry
WIZZ AIR- Earnings Revision
Recommendation: BUY
Target price (12M): GBP 37.0
- Due to the transfer of coverage we reviewed our earnings forecast and investment case. Based on our base case scenario, we upgraded our recommendation to BUY with a 12-m TP of GBP 37.0, implying a 22% upside to the current share price.
- The key to growth is to gain market share. We expect Wizz Air to raise additional seat capacity by 16% YoY in FY19F and FY20F. We assume that load factor will improve further, peaking at 94% in the long run. On the back of intact demand for tickets, annual PAX growth of 18% and 17% is sustainable in FY19 and FY20, respectively.
- Based on our estimate, Wizz Air will reach net revenues of EUR 2.33bn and EUR 2.70bn in FY19 and FY20, respectively. We believe the carrier will be able to transfer increasing pass-through costs (e.g. fuel cost) on to customers. However, we expect average fares to decline should oil prices remain at these levels. Ancillary revenues are likely to rise by 7% YoY in FY20F to account for ca. 44% of total sales after Wizz changed bag policy again.
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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