(Sharecast News) - Barclays has slashed its target price for low-cost airline Wizz Air on the back of rising geopolitical tensions in Israel, which it says will dent profits this year.
Barclays cut its target for the shares from 1,800p to just 1,500p and maintained an 'underweight' position on the stock.
A growing number of airlines have cancelled flights to Israel and surrounding regions as a result of the ongoing conflict between the Israeli government and its continued bombing of Gaza.
"The Israel-Palestine conflict adds a new challenge for Wizz, on top of its uncertainties from the GTF engine problems," the bank said in a research report on Friday.
Wizz Air in the past has boasted its position as the first airline to offer ultra low-cost services to the Middle East region, with regional hubs in Abu Dhabi and Saudi Arabia. In Abu Dhabi in particular, it said in June that it planned to increase its fleet from nine to 16 over the financial year to March 2024, doubling the number of employees there to 800.
Meanwhile, Wizz Air is still struggling with issues to do with Pratt & Whitney Geared Turbofan (GTF) engines, which powers all of its A320 NEO family aircraft. The company said in September that the issues will reduce capacity by 10% in the second half of the fiscal year to March 2024.
"We lower FY24 net profit estimates by 7% anticipating weakness on Mid East flying. Estimates for FY25 and FY26 are unchanged but remain far below consensus."
The stock was down 1% 1,591p by 1028, having now fallen 18% since the violence began.
Wizz Air (WIZZ)
