Lufthansa: Barclays cuts target price; shares fall
(CercleFinance.com) - Barclays has cut its target price for the Lufthansa stock, to reflect the German carrier's "deep restructuring" required to face the Covid-19 crisis.
The airline's shares have fallen by up to 3.5% on the Frankfurt Stock Exchange on Tuesday morning.
Barclays has cut its target price for the share from 6.2 euros to 4.5 euros, maintaining its "underweight" rating on it.
"Two words that will likely dominate the conversation on Lufthansa in at least the next three years will be repayments and restructuring," the broker said in a note.
With 8.7 billion euros of additional debt repayments, 300-400 million euros in incremental interest payments per annum and a 20% government holding, Lufthansa's focus over the next three years will be primarily to reshape its business to cover its obligations, the broker said.
With the prospect of a 25% dilution and no dividends, constructing a positive thesis now proves "challenging", Barclays added.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
The airline's shares have fallen by up to 3.5% on the Frankfurt Stock Exchange on Tuesday morning.
Barclays has cut its target price for the share from 6.2 euros to 4.5 euros, maintaining its "underweight" rating on it.
"Two words that will likely dominate the conversation on Lufthansa in at least the next three years will be repayments and restructuring," the broker said in a note.
With 8.7 billion euros of additional debt repayments, 300-400 million euros in incremental interest payments per annum and a 20% government holding, Lufthansa's focus over the next three years will be primarily to reshape its business to cover its obligations, the broker said.
With the prospect of a 25% dilution and no dividends, constructing a positive thesis now proves "challenging", Barclays added.
Copyright (c) 2020 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.