Norwegian Air Shuttle ASA (NAS), Europe’s fourth-largest discount carrier, jumped to a seven-month high in Oslo after Carnegie ASA recommended buying the stock as the airline benefits from growing demand for cheaper travel.
Norwegian Air rose as much as 11.6 percent to 101 kroner, the highest since Aug. 2, and closed at 99.50 kroner in the Norwegian capital. That makes the company the biggest climber on the Bloomberg European Travel Index (BEUTRAV) today.
“We believe consumers prefer low-cost carriers and that Norwegian Air will continue to capture market share in the Nordics,” Preben Rasch-Olsen, the analyst at Carnegie, wrote in a note to clients today. “The favorable cost position secures profitability although the yield will remain depressed.”
The brokerage initiated coverage of the airline with a “buy” recommendation and 180 kroner target price.
Norwegian Air, based at Fornebu near Oslo, is seeking to increase capacity while reducing operating costs. The carrier earlier this year ordered 222 Boeing Co. (BA) and Airbus SAS planes valued at 127 billion kroner ($22 billion).
“By replicating its domestic strategy in the Nordic market, Norwegian will be able to fill its new planes,” Rasch- Olsen said.
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