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Author: Alan LittleDate: 2021-09-07

TUI (TUI) -1.44% after Deutsche Bank cuts price target on weaker forecast

TUI (TUI) closed lower in London Monday after Deutsche Bank cut its price target to 335p on expectations of a slower rate of recovery for the travel operator.

US stock markets were closed for Labor Day on Monday, but there was activity in London where TUI (TUI) slipped 1.44% after Deutsche Bank (DB) slashed its price target for the travel agency group.

At the start of the new week, DB said that it was not overly optimistic about a quick rebound for TUI, citing a lack of evidence to support a rise in demand and capacity to pre-pandemic levels.

That represents a slight change of tack for the German investment bank after it offered a more bullish assessment earlier in the year amid an easing of travel-related restrictions across Europe.

DB said that it had been in dialogue with TUI about its short-term prospects and has subsequently cut its guidance for business levels in Q4.

TUI now expects flight capacity to reach around 60% for the final few months of the year, which is down from the previous 70% to 75% estimate.

The more conservative outlook has been driven by ongoing uncertainty about the Delta variant in the travel sector and the fact that recovery might be slower than expected.

The consensus for TUI’s full-year revenue is €5.2bn, which is also lower than before and due in part to a weaker Q4.

Underlying losses are expected to widen to €2.05bn due to a €70m deficit between October and December.

After DB shaved its price target from 410p to 335p, TUI shares slipped into negative territory early in London on Monday and eventually closed 1.44% lower at 302.20p.

The FTSE 100 benchmark did rise by 50 points though with IG chief market analyst Chris Beauchamp noting that “Friday’s nervousness” had been “swept aside”.

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