Deutsche Bank upgrades Wizz Air, hikes price target

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.