Stock of the day 09/12/2015 – TUI Group AG

Since it formed just over a year ago TUI has been on somewhat of a rollercoaster ride, one that, admittedly, has been endemic to the sector as a whole.

Can the world’s largest tour operator reclaim its year highs in the aftermath of its full year figures on Thursday?

For the first 5 months of the year things were going well for TUI; starting 2015 at £10.76 the stock had risen to the £12.70s by the middle of May, boosted by investor-reassuring updates in February and March. However, the stock took a tumble following its May 13th half year results, taking TUI from a then-high of £12.85 to £12.08 despite narrower underlying losses in its second quarter and comments stating the company was confident it would reach its 15% full year profit growth target. It appears that TUI’s choice to retire the Thomson and First Choice brands, the main takeaway from the post-merger/half year update, displeased investors, sending the stock to £11.54 by the start of June.


(Source: IT-Finance.com 09/12/2015)

Things had begun to bounce back as June got underway, only for the Greek issues at the start of the month, and the tragic events in Tunisia at the end of the month, to leave it at a year (and all-time) low of £10.04 by the start of July. The stock then flitted around a £10 to £11 trading bracket until mid-August, when TUI’s 9 month interim update reassured investors, an 18% increase in underlying earnings to €194 million countering news that the events in Tunisia and Greece would cost the company €35 million.

Barring a wobble around Black Monday August’s positive update helped sent TUI back to £12.40 by the middle of September, before a nascent fall (taking the stock below the £12 mark) was stalled by a strong update that claimed winter 2015/15 booking was ‘in line with expectations’ and that trading remained ‘robust’. A surge at the start of October then took the stock to a fresh all-time high of £12.88, before quickly falling once again to loiter around the £12.20 for the rest of the month.

November was an unpleasant month for TUI, and the sector as a whole, with the fall at the start of the month followed the bombing of a plan on route to Russia from Egypt (and the subsequent grounding of flights from the country) intensified by the attacks in Paris, culminating in the stock hitting £10.90 towards the end of the month. Since then, however, TUI has managed to recover once again, sitting at a current trading price of £11.33 (IT-Finance.com, 09/12/2015).

In terms of its full year report on Thursday, it is likely that, as in August, things will be dominated by the costs of the recent atrocities around the globe, especially those in France and Egypt. Deutsche Bank, however, has stated it still expects the company to reach the company’s previously stated target of 10% underlying growth.

TUI Group has a consensus rating of ‘Buy’ alongside an average target price of £13.12.