Deutsche starts Wizz Air at 'buy', sees 'significant opportunity'

Analysts at Deutsche Bank initiated coverage on budget carrier Wizz Air on Thursday, choosing to hit the group's shares with a 'buy' rating right out the gate.

With Wizz's management demonstrating a cost base "similar to Ryanair" and margins well ahead of competitor easyJet, Deutsche said Wizz presented an "exciting opportunity" to investors, the German broker said.

Deutsche also highlighted that Wizz's route network was focused primarily on Central and Eastern Europe destinations, where the broker saw a "significant opportunity" to grab market share from rivals.

"Legacy competitors are weak, economies are set to grow faster than Western Europe, and 'travel' per capita is set to increase," Deutsche said when discussing the aforementioned markets.

All of the above led Deutsche to conclude that Wizz had "substantial" scope for multiyear earnings growth and forecast an compound annual growth rate for the company's earnings per share of 27% until 2022.

In addition to the 'buy' rating, Deutsche started Wizz off with a target price of 41.50p.