MARKET REPORT: Airline stocks soar as analysts say the travel industry is poised for a good summer despite ongoing economic turmoil
Airline shares rose as analysts said the travel industry should have a good summer despite ongoing economic turbulence.
Barclays has told clients that soaring inflation and rising interest rates are unlikely to stop people going on holiday.
Instead, airlines should take advantage of consumers looking to spend the money they’ve saved from the pandemic on experiences like ski trips and city breaks.
“Macroeconomic concerns are weighing on this sector, but we believe European travel demand will remain strong through the summer,” Barclays said.
It released a series of target price upgrades, with Easyjet dropping from 510p to 570p, British Airways owner IAG from 165p to 170p and Wizz Air from 2400p to 2450p.
Takeoff: Barclays told clients that soaring inflation and rising interest rates are unlikely to stop people going on holiday
Easyjet and IAG were also raised to ‘overweight’ from ‘equal weight’, but Wizz Air was kept at ‘underweight’. While Barclays expects all three to report losses in their next updates, it said results are expected to be significantly better than the same period a year earlier when Omicron went into business. And airlines should also benefit from lower fuel costs and a weaker dollar.
A cautionary note was issued regarding industry-wide challenges related to ground handling staffing, airport security and air traffic control.
Easyjet rose 3.5%, or 17.4p, to 518.4p, IAG gained 1.6%, or 2.38p, to 150.98p and Wizz Air added 3.5%, or 101p, to 2973p.
The FTSE 100 rose 0.2%, or 11.31 points, to 7631.74 and the FTSE 250 climbed 0.1%, or 20.56 points, to 18928.3.
London’s main stock index has risen in every session this week, gaining a total of around 3%.
It capped a tumultuous month which saw the FTSE 100 close more than 3% amid turmoil in the banking system.
It is still up 2.5% this year.
Investors in NCC sent a clear message as its stock fell more than a third after warning earnings would fall short of expectations.
The cybersecurity specialist expected to make a profit of around £47million for the year to May 31. But customer layoffs, recent financial turmoil following the collapse of Silicon Valley Bank and rising interest rates have weighed on the North American tech sector. As a result, NCC now expects cybersecurity revenue and profit to fall to between £28m and £32m. The shares fell 33.3%, or 51p, to 102.2p.
Ocado added 1.5%, or 7.8p, to 535p a day after claiming “total victory” in robot wars with a rival.
Meanwhile, Beazley rose 2.1%, or 12.5p, to 597.5p after UBS upgraded insurer Lloyd’s of London to ‘buy’ from ‘sell’ and raised the target price at 688p versus 646p.
Similarly, Pearson made gains after Exane BNP Paribas raised the education group’s rating from “outperforming” to “neutral”. The shares added 3.5%, or 28.6p, to 844.4p.
The Computacenter boss said the IT group can look forward to this year as it “not at all” has the same challenge it faced in 2022. Revenue rose 28.5% to 6 £.5bn in 2022. Profits were nearly flat (up 0.4 per cent) at £249m. The shares rose 2.6%, or 54p, to 2,138p.
Abingdon Health said companies have moved away from work related to Covid-19.
During the pandemic, the York-based diagnostics group launched a home Covid antibody test.
But he has now said all of his lateral flow work is unrelated to Covid-19.
Revenue of £1.1m for the six months to December 2022 was down slightly from the same period a year earlier.
But he added that sales for the year to June are expected to be “significantly higher” than the £2.8million reported last year.
The shares, which floated at 96p in December 2020, jumped 13.6%, or 0.75p, to 6.25p.