Wizz Air: thrust issues (stays BUY)
Wizz Air’s unit profitability is struggling to take off, towards the pre-pandemic levels. Instead, the stock has plunged, following the latest guidance cut, last week. We had been sceptical that the former guidance was attainable. Now, our concern is that the new guidance could still prove too ambitious (especially the ex-fuel CASK (CASKX) growth staying contained in single digits in FY25E). This is problematic, as Wizz needs to work on winning back its credibility and the market’s trust – and another guidance cut may not be the best way of going about this. Our updated forecasts are, again, more conservative than both the consensus and the guidance. This should perhaps imply a more negative near-term view than our BUY rating (maintained; while we reduce our 12M price target (PT) to GBP 22/share, as we have cut our forecasts), suggests. That said, despite the malaise of the past 4Y, we believe that Wizz should still have what it takes to improve its profitability, back towards the pre-pandemic levels. Hence, the current depressed levels could prove attractive for investors who are able to stomach the possibly volatile near-term trading, in our view.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.
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