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Sorry talkinboutWillis English is my 5th Language, I still get muddled sometimes.
TUI are looking for their EBIT to rise to 7-10% in the medium term, I guess they are looking at 2025 onwards, don't worry they are German it will be ok.
Hi zccax77,
It's a great Q and likely one of the reasons it's SP has struggled somewhat.
So interesting that the MS analyst, as part of his upgrade etc, was stating exactly that - that in his opinion by 2026, margins etc should be back to pre pandemic.
My 'guess' is that in the years since coming out of the pandemic, the company has driven sales at the expense of margins - just look at 2023 results - RECORD sales and improving, but still a way to go profitability etc etc.
What this does though, is it encourages brand loyalty for one and second, in a marketplace renowned for 'value', it enables Tui to claim that crown too.
That's why MS believes that their 'intent' this year of growing profits by 25% is, in their words 'conservative'
Hope this helps and of course only my thinking, but any business coming out of a scenario which nearly killed them off, has to start somewhere and that was generating sales. NOW, they need to show that they can grow profits considerably too and me and assume many here, believe that's on the way
GLA
How can they be so inefficient:
"This would also leave Tui's tour operating Ebit margin at just 2%, well below peers, such as Jet2 at 8% and easyJet Holidays at 11%."
Yes, they would *HAVE* had to tighten it up.
Covid was obviously a negative, but they would of had to tighten up their operation further, going forward this is a good thing.
All they have done is stated what several people on here have always said. There’s no reason Tui can’t get back to pre Covid market cap.
What has changed that makes people think Covid caused a sea change in peoples holiday needs? If anything it made people appreciate holidays more.
Did covid damage Tui’s brand? No.
The capital raises damaged investor sentiment, which will take time to come back but IMO Tui is the same beast it was pre Covid so no reason it’s not valued the same.
Hi OTCDS and all,
Sorry, the other thing that struck me out of your broader MS commentary, was about the remaining KfW facility, which MS is quoting as only having 0.5 Billion left to clear - think I shared last week when Tui released the sustainability Bond, that the KfW might have 0.6 Billion left to clear - so all in the same ball park and remember that it is THIS facility which needs clearing and the final hurdle to being able to re-instate a divi! Starting to have confidence that a divi could be reinstated by the end of the year and wouldn't that be something
GLA
Holiday operator Tui rose by 6.6%.
Investment bank Morgan Stanley upgraded Tui to 'overweight' from 'equal weight.'
Morgan Stanly said that Tui shares could treble, assuming a return to pre-Covid margins and pre-Covid valuation multiple
Hi OTCDS2023,
Many thanks for sharing the whole lot - I read it on Market Screener this morning and thought that was positive enough, but the fuller detail makes it excellent reading.
To be honest, the BIG thing for me today, as well as the analyst words of course, is the fact that it comes from one of the BIG boys over in the US.
So we now have Deutsche and MS fully within our camp and have no doubt, more will follow.
Also based on what MS says, we may even get Tui to upgrade it's earnings outlook at the Half Year, which would be another great step forward with the SP
Thanks again
"Tui will be headed back below 500p soon."
Based on WHAT?
(Alliance News) - Tui's share price could soar from current levels, according to a scenario for the German holiday operator painted by Morgan Stanley.
On Wednesday, the investment bank upgraded Tui to 'overweight' from 'equal weight.'
It raised its price target on the stock to EUR10 per share from EUR9 and to 850 pence per share from 780p.
Morgan Stanley has a bull case share price of EUR23, more than triple the current share price, assuming a return to pre-Covid margins and pre-Covid valuation multiple.
Shares in London shot up 6.3% to 555.00p each, while in Frankfurt they leapt 6.3% to EUR6.50 per share.
Morgan Stanley highlighted the potential tour operating margin upside, a more sustainable looking balance sheet, improving free cash flow potential, a very low valuation, and an attractive risk-reward.
"We see much more upside than downside potential," the bank said.
The broker pointed out Tui has been one of the worst performing travel stocks in Europe reflecting three separate equity raises.
Morgan Stanley said travel demand still appears solid and thinks Tui's guidance for equal to or greater than 25% earnings before interest and tax growth in 2024 looks conservative.
After a better-than-expected first quarter, it implies just 8% for the rest of the year, Morgan Stanley pointed out.
This would also leave Tui's tour operating Ebit margin at just 2%, well below peers, such as Jet2 at 8% and easyJet Holidays at 11%.
Morgan Stanley noted Tui's balance sheet is getting "back to normal".
The company has now halved its undrawn EUR1 billion state aid facility from Germany, and is hoping to remove the remaining EUR0.5 billion as soon as possible.
Free cashflow remains weak, but has scope to improve, Morgan Stanley said.
"While a dividend resumption seems unlikely for the next one to two years, we think 2026 is a distinct possibility," the bank commented.
Morgan Stanley pointed out while it is easy to "lump" Tui into the tour
operating and airline basket, around 75% of its profit comes from higher-margin and higher-growth hotel and cruise subsidiaries, where valuations are enjoying a premium.
By Jeremy Cutler, Alliance News reporter
I think you are out of order.
Warning and calling a poster an irritant.
And telling them to stay away should not be accepted.
And an apology should be posted NOW.
They're upgrading it to strengthen it around today's budget... those issuing the upgrades bound to pivot to selling/shorting it, and having drawn in the buyers they'll force some pi's to take some painful losses. Tui will be headed back below 500p soon.
Oops, I see MS actually did upgrade IAG as well - to 2.50 EUR - so maybe it is doing much of the heavy lifting after all.
Yes, initially it looked like the MS upgrade might have accounted for the big boost this morning. But IAG is up almost as much without an upgrade - and the whole market is up - so you would have to think this is budget driven.
That said, TUI is still only back to where it was 3 days ago - when many of us had £5.75 and higher in our sights.
Maybe the MS words will kick in later and get us there.
That was the next support level after 5.24 (which was broken yesterday), obviously an overweight upgrade by MS the next morning is going to influence the share price positively (and I am glad it did) - only trying to provide support to the group.
Wise move imo... this will be making another few sharp drops yet!
OTCD, where was your next target again? 480p lol?
I don't doubt that summer 2024 will see a massive boom time for the travel sector, the NI & income tax cuts later today will flow straight into leisure spending and for some clearing down any utility/card bill arrears... However, immediately after the GE whichever Government ends up in office they'll find they have to bring in punishing tax rises because UK economic growth will inevitibly fall short of overly optimistic forecasts yet again and the feel good summer party times are bound to abruptly end. Feels as though that crash many have been warning about is now on the immediate horizon. For those buying into the rally, be careful to exit before they take away that punch bowl!
Got my holiday money.
FYI Positive upgrade -
NEW YORK (dpa-AFX) - The US investment bank Morgan Stanley has upgraded Tui from "Equal-weight" to "Overweight" and raised its target price from 9 to 10 euros. Analyst Jamie Rollo sees significantly more potential than risks in Europe's currently worst-performing tourism share, according to a study published on Wednesday. The increase in earnings targeted by the Group for 2024 appears conservative and the balance sheet problems have largely been solved, he said./ag/gl
The details:
NEW YORK (dpa-AFX) - The US investment bank Morgan Stanley has upgraded Tui from "Equal-weight" to "Overweight" and raised its target price from 9 to 10 euros. Analyst Jamie Rollo sees significantly more potential than risks in Europe's currently worst-performing tourism share, according to a study published on Wednesday. The increase in earnings targeted by the Group for 2024 appears conservative and the balance sheet problems have largely been solved, he said./ag/gl
Overweight! PT 10 EUR! Buckle up, cleared for take-off!
Premature next stop 480, lets see.
Support @ 5.25ish and tested earlier today, hopefully bounce abit from here, however dependant on macro so we will see, good luck all.