Has the inflection point come for Thomas Cook Group (LON:TCG), which on Wednesday coupled a resilient trading update with the reinstatement of dividend payments that had been absent for five years?
Well yes, according to one bank that reckons the valuation is ‘supportive’ and the margins ‘resilient’, giving scope to ‘materially increase’ the payout.
Big-hitting Barclays (LON:BARC) has upgraded to ‘overweight’ from ‘neutral’ on the holiday company, while pushing its price target out to 90p a share from 75p - that’s around 10p ahead of the current price.
The valuation is generated using the historic price-to-earnings multiple of eight-times.
On the payout, Barclays said: “Given ongoing exceptional charges, the company prudently is keen to ensure the dividend is paid out of post exceptional income.
“However should exceptional items reduce, or the company become more confident in its earnings and cash trajectory, we see scope to materially increase the payout ratio.”
Of the five analysts logged as following Thomas Cook only two are positive on the stock. There is one ‘seller’ with remainder holding ‘neutral’ recommendations.
The consensus price target has come down from 85p six months ago to 64p today.