Thomas Cook Share News (TCG)

(Sharecast News) - Thomas Cook was under the cosh again on Friday a day after its shares tumbled on the back of a profit warning, as Citi downgraded it to 'sell' from 'neutral', arguing that the stock is basically worthless.Thomas Cook fell sharply on Thursday after it said losses before tax widened to £1.46bn in the first half of the year from £303m the year before amid "challenging" conditions, and warned over second-half earnings. The group said the loss reflects a £1.1bn non-cash impairment of historic goodwill, largely related to the merger with MyTravel in 2007 which it has re-valued in light of the weak trading environment.Stripping out the impairment, the underlying earnings before interest and tax loss increased to £245m from £170m.Following the results, Citi slashed its price target on the travel company to zero from 28p, as it said option value is the only thing left in Thomas Cook equity. It said the outlook for FY19 was "significantly" weaker than expected, with guidance for underlying earnings before interest and tax below the second half of 2018.Citi said that FY18 net debt of around £750m "implies zero equity value"."We cut our underlying FY19E EBIT forecast from £221m to £163m (-26%) which drives underlying earnings per share -74% to 1.2p," the bank said."We fear that news of the £1bn write-down and the 'material uncertainties' comment from the auditors will unsettle consumers and drive further weakness in bookings (currently -12%)."Although the group has longstanding hotel partners which have been supportive we fear that further weakness in the bonds/shares may also cause them to seek to tighten payment terms."At 1550 BST, the shares were down 39% to 12p.Commenting on the Citi downgrade, CMC Markets analyst Michael Hewson said: "The calculation here would appear to be that debt levels of £1.25bn are likely to result in a fire sale of assets unless the outlook for the business starts to improve quickly. Investors appear to be losing confidence in the ability of management to turn the ailing business around."