TUI AG (LON:TUI) shares were flying high this morning after the travel operator was on the end of a double upgrade from Swiss banking giant Credit Suisse.
Analyst Tim Ramskill moved the stock to ‘neutral’ from ‘underperform’ and upped his price target to £13 (from £11).
In a note to clients, he said that the valuation of TUI compared to its peers and the kick it should get from currency movements were behind his decision to turn more bullish on the Thomson Holidays owner.
“TUI has underperformed travel peers (ex-AIRF) by 32% year-to-date plus its PE (price-earnings) premium to Thomas Cook Group PLC (LON:TCG) has fallen to just 8% vs a 50% average since the 2014 merger and re-listing in London.”
Ramskill added that the fall in the euro-pound exchange rate to €1.10 from €1.18 is worth about 85p a share given that a sizeable chunk of TUI’s revenues are generated in euros.
He also likes that greater mix of revenues, with cruise and hotel earnings on the rise.
Shares were up a little over 4% on Monday morning to £21.84.