Stifel resumes coverage of Tui at 'buy', says shares oversold

Tui shares rallied on Monday as Stifel resumed coverage of the stock at 'buy' with a 940p price target offering a 32% total shareholder return.

Stifel said the strong market reaction to the company's aborted profit guidance has left the shares looking oversold, with free cash flow inflection underpinning a 9% dividend yield and sum-of-the-parts valuation support.

"Near term focus will be on the second-half profit recovery, which still carries risks, reflecting a challenging backdrop for the industry," it said.

"Tui's vertically integrated business model leaves it well placed to adapt to industry change and possible consolidation, as peak capex gives way to a third wave of tech-led initiatives."

At 1215 BST, the shares were up 3.6% at 833.20p.