Berenberg hikes target price on Wizz Air

Analysts at Berenberg hiked their target price on low-cost carrier Wizz Air from 3,200.0p to 4,000.0p on Tuesday, stating the group was in the right passenger segment for recovery.

Berenberg said it remained "positive" on Wizz Air's "unique growth profile" following its 2020 results and several roadshow meetings and now expects the airline to capitalise on tight cost control, significant liquidity, a relatively isolated route network, and a customer demographic that is likely to resume flying earlier than those of other airlines.

Wizz Air had previously highlighted that bookings from younger passengers and those visiting friends and relatives were "significantly higher" in May versus its annual average and with an average customer age of 36, the German bank said Wizz was likely to benefit from a quicker return of demand.

The analysts estimated that Wizz Air has over 16 months of liquidity available at near-zero demand, assuming outflows of roughly €90m and highlighted that importantly, daily bookings had begun to improve to approximately €4m from under €1m - but still well shy from the €10m it often records in strong seasonal periods.

Berenberg also revised its capacity outlook and mark fuel and currency to market when taking another look at its target price and reiterating its 'buy' rating on the firm.

"We expect Wizz to return to its FY 2020 revenue by FY 2022, at least one year before most other carriers in our global airlines coverage. Hedging losses should fade beyond FY 2021, and we incorporate lower airport charges into our outlook. Changes increase our FY 2022E net income by 8%," said the analysts.