SAS (Hold, TP: SEK11.00) - Near-term outlook hit by virus
We reiterate our HOLD on SAS and have cut our target price to SEK11 (14.5) on estimate reductions and a market revaluation to reflect the coronavirus impact. While some investors might find the stock appealing following the significant share price drop, we reiterate a cautious stance as we see limited near-term earnings support, with our 2020e EPS pushed into negative territory and a subdued earnings outlook given the potential impact of the coronavirus.SAS is engaged in providing transportation services. The core business of Co. is operating passenger flights on a Nordic and international route network. Co.'s three main operational hubs in Copenhagen, Stockholm and Oslo form the backbone of its flight network. In addition to passenger flights, Co. provides air cargo and other aviation services at selected airports in its route network. Co.'s operations include Scandinavian Airlines. In addition to the airline operations of the consortium Scandinavian Airlines System, Scandinavian Airlines also comprises ground operations, technical operations, SAS Cargo and Blue1. Scandinavian Airlines includes SAS Cargo and SAS Ground Handling.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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