TUI AG (LSE:TUI)’s better than expected fourth-quarter operating cash flow number was still not enough to convince Barclays Capital of the merits of investing in the travel group.
There was also some ‘encouragement’ from parts of the business, including hotels, which returned to profitability.
However, it added: “Travel requirements and COVID-19 news flow have, once again, created uncertainty,” Barclays said in a brief note to clients.
“Meanwhile, the risk of dilution remains as the group continues to address the leveraged balance sheet.”
It remains ‘underweight’ on TUI shares with a price target of 200p. Mid-afternoon, the shares were changing hands for 224p, up 1.4%.
Of the 14 banks and brokers covering TUI, seven are negative on the stock. Only two say ‘buy’ with the remainder sitting on the fence. The consensus price target is 285p.
Earlier, the travel group said the holiday bookings were slowing after the emergence of the Omicron Covid variant. It had 4.1mln bookings for its next winter and summer seasons.
TUI said: "The increased media coverage of rising incident rates and the emergence of new Omicron variant has weakened this positive momentum, particularly for winter."
Losses for the fourth quarter narrowed to £60.5mln for the company’s fourth-quarter to September 30, from a whopping £852mln a year earlier.