Flybe rated as 'buy' with 132p target price by Numis

(ShareCast News) - Flybe shares fell almost 5% as Numis rated the stock as a 'buy' with a 132p target price.Numis said Flybe's reported pre-tax profit of £5.5m, from a £25.4m loss, was ahead of the brokerage's forecast for £3m.This meant the regional airline had achieved an important milestone in its transformation, said analyst Wyn Ellis."Trading conditions in the sector were challenging during H2 and, in our opinion, the results demonstrate improved management controls and greater resilience, with a strengthened balance sheet and progress in key KPIs," Ellis said.Numis noted that Flybe, looking ahead, had confirmed a challenging industry environment given the spectre of terrorist activity, industrial unrest in France, consumer uncertainty and the highest level of seat capacity growth in the European short-haul market for six years.However, the airline had promised to remain disciplined in pricing, and that it would continue to focus on unit cost reduction and maintain its capacity discipline through continuing fleet transactions."Market conditions continue to be tough and we believe that the revenue environment has deteriorated in recent months," said Ellis in a research note."Flybe notes that it is already taking cost and capacity actions to support growth in FY 2017 and the profit and loss (statement) will also benefit from lower E195 costs, reduced fleet costs and a reduction in the unit fuel bill."Numis had, reflecting the tougher industry revenue outlook, trimmed its FY 2017-estimated pre-tax profit forecast for Flybe to £21.7m, from £23m, with more modest progress now expected in FY 2018.At 12:26 BST, shares in Flybe were down 4.26% to 56.25p.