Deutsche Bank upgrades Wizz Air, hikes price target

Deutsche Bank upgraded Wizz Air to ‘hold’ from ‘sell’ on Wednesday and hiked the price target to 2,300p from 1,800p.

The bank noted that in its 2024 outlook report on 4 December, it downgraded the shares for two main reasons. Firstly, fears that Q3 results on 25 January might act as a negative catalyst. Secondly, concern that GTF compensation might be unable to offset a deterioration in underlying trading, putting consensus estimates at risk.

DB said that while Q3 unquestionably turned out to be a very tough quarter, and while Wizz has underperformed easyJet and Ryanair by 7% and 3% over the period in question, the shares have nonetheless risen by 8% in absolute terms since 4 December. This has been helped by two things, according to Deutsche.

Firstly, a still very supportive backdrop in terms of supply and demand for intra-EU leisure and VFR (visiting friends and relative) travel in 2024, as evidence by the outlook commentary from all the low-cost carriers during recent reporting and by fares seen in DB’s pricing analysis report from 6 February.

Secondly, it pointed to a better-than-expected outlook from Wizz in terms of how actions taken and compensation from Pratt & Whitney can potentially mitigate GTF engine issues over the next 12 months.

At 1440 GMT, the shares were up 2.2% at 2,109p.