Thomas Cook: Berenberg returns to 'sell' on weak performance

(CercleFinance.com) - Berenberg has downgraded Thomas Cook from "hold" to "sell," slashing its target price for the share from 65 pence to 12 pence, saying that the group's operational performance "continues to be weak.
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The British tour operator said earlier this week that its 2018 profit would be lower than expected, after the summer heatwave hurt its business.

"While its performance has undoubtedly been affected by the weather, we fear that this is merely papering over the cracks of a structurally challenged business model," Berenberg said in note issued today.

Citing "weak" operational performance and anemic cash generation, the broker believes that there is a risk that the company will need fresh equity.

Given this "heady cocktail," Berenberg thinks that Thomas Cook's shares are currently "uninvestable" and therefore returns to a "sell" rating on the stock.

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