SSP Group plc (LSE:SSPG), the travel food and beverage operator, fell 5.2% to 167.50p after UBS cut its rating on the stock to 'neutral' from 'buy', slashing its price target to 180p from 245p.
The downgrade comes amid concerns that the ongoing Middle East conflict will weigh on aviation volumes through the critical summer trading period.
The Swiss bank said forward-looking capacity data across North America, Europe and the UK had deteriorated materially since it upgraded the shares in February, prompting it to reduce its full-year like-for-like revenue growth forecast by 1.5 percentage points.
UBS now forecasts earnings per share of 13.3p for the year to September 2026, below the top of SSP's own guidance range of 12.9p to 13.9p, and free cash flow of £88m, short of the company's target of more than £100m.
The bank said the first half of the financial year was unlikely to be badly affected, with data from major European airports and the US Transportation Security Administration pointing to low single-digit volume growth in the quarter to March.
However, SSP generates almost all of its net profits in the second half of the year, making the group's commentary on the summer outlook the key focus when it reports first-half results on 19 May.
UBS raised its weighted average cost of capital to 10.6% from 9.5% to reflect the uncertainty, the primary driver of the price target reduction.
The bank said a swift resolution to the Middle East conflict and a return to pre-outbreak fuel prices would likely trigger a rapid improvement in sentiment, but warned that the longer the disruption persists, the greater the risk to the seasonally critical summer period.
Longer-term, UBS said it remained constructive on SSP's growth prospects, citing expanding passenger volumes, the potential value crystallisation from its listed Indian operations, and the ongoing review of its European rail business as possible catalysts for a re-rating.