MARKET REPORT: Airline stocks fly higher as analysts say the travel industry is set for a good summer despite ongoing economic turmoil
Airline stocks flew higher as analysts said the travel industry is set for a good summer despite ongoing economic turmoil.
Barclays told clients that soaring inflation and rising interest rates are unlikely to stop people from jetting off on holiday.
Rather, airlines should benefit from consumers looking to spend the money they saved through the pandemic on experiences such as ski trips and city breaks.
Taking off: Barclays told clients that soaring inflation and rising interest rates are unlikely to stop people from jetting off on holiday
‘Macro concerns weigh on this sector, yet we think European travel demand will stay strong through the summer,’ Barclays said.
It issued a string of target price upgrades, with Easyjet lifted from 510p to 570p, British Airways owner IAG from 165p to 170p and Wizz Air from 2400p to 2450p.
Easyjet and IAG were also raised to ‘overweight’ from ‘equalweight’ but Wizz Air was kept at ‘underweight’.
While Barclays expects all three to report losses in their next updates, it said the results should be much better than the same period a year earlier when Omicron hit business. And airlines should also benefit from lower fuel costs and a weaker dollar.
There was a note of caution issued over industry-wide challenges relating to the staffing of ground handling, airport security and air traffic control.
Easyjet rose 3.5 per cent, or 17.4p, to 518.4p, IAG gained 1.6 per cent, or 2.38p, to 150.98p and Wizz Air added 3.5 per cent, or 101p, to 2973p.
The FTSE 100 ascended 0.2 per cent, or 11.31 points, to 7631.74 and the FTSE 250 climbed 0.1 per cent, or 20.56 points, to 18928.3.
London’s main stock index rose every session this week, gaining a total of around 3 per cent.
It capped off a tumultuous month which saw the FTSE 100 close down more than 3 per cent amid turmoil in the banking system.
It is still up 2.5 per cent this year.
NCC investors sent a clear message as its stock plunged by more than a third after it warned that profits would be lower than hoped.
The cyber-security specialist had expected to make a profit of around £47million for the year to May 31. But client layoffs, the recent financial turmoil following the collapse of Silicon Valley Bank and rising interest rates weighed on the North American technology sector. As a result, NCC now expects lower cyber-security revenue and profits of between £28million and £32million. Shares tumbled 33.3 per cent, or 51p, to 102.2p.
Ocado added 1.5 per cent, or 7.8p, to 535p a day after it claimed ‘total victory’ in robot wars with a rival.
Meanwhile Beazley rose 2.1 per cent, or 12.5p, to 597.5p after UBS upgraded the Lloyd’s of London insurer to ‘buy’ from ‘sell’ and raised the target price to 688p from 646p.
Likewise, Pearson made gains after Exane BNP Paribas raised the education group’s rating to ‘outperform’ from ‘neutral’. Shares added 3.5 per cent, or 28.6p, to 844.4p.
The boss of Computacenter said the IT group can look forward to this year as it does not ‘have anywhere near’ the same challenge it faced in 2022. Revenue increased by 28.5 per cent to £6.5billion in 2022. Profits were almost flat (up 0.4 per cent) at £249million. Shares increased by 2.6 per cent, or 54p, to 2138p.
Abingdon Health said business has moved away from Covid-19 related work.
During the pandemic, the York-based diagnostics group launched an at-home Covid antibody test.
But it now said all its lateral flow work is non-Covid-19.
Revenues of £1.1million for the six months to December 2022 were slightly down on the same period a year earlier.
But it added that sales for the year to June should be ‘materially higher’ than the £2.8million it reported last year.
Shares, which floated at 96p in December 2020, surged 13.6 per cent, or 0.75p, to 6.25p.
