Bloomberg News

Thomas Cook Rises for Fifth Day Ahead of Results: London Mover

November 23, 2012

Thomas Cook Group Plc, the U.K. tour operator saved by an emergency loan last year, extended its rising streak to the longest in a year as an analyst at Investec raised his 12-month price prediction by 60 percent.

Chief Executive Officer Harriet Green, who joined the 170-year-old tour company in July, may indicate she aims to make “swingeing” cost cuts when Thomas Cook reports full-year results five days from now, analyst James Hollins said. Green is due to present the results of her strategic review next year.

“We regard the management’s results debut as a new dawn for the group,” Hollins said in a note to clients today. He raised his price target to 40 pence from 25 pence and kept his buy recommendation on the stock. The new target is about 73 percent higher than yesterday’s close. “The business turnaround opportunity is tangible.”

The shares rose 4.4 percent, up a fifth day in the longest series of advances since October 2011. The stock closed at 24 pence and the volume of shares traded, at 12.6 million, was almost three times the three-month daily average.

Analysts are split over prospects for the tour operator, which in May sold and leased back 19 aircraft for 182.9 million pounds ($293 million) to raise cash after refinancing 1.4 billion pounds of loans.

Simon French, an analyst at Panmure Gordon & Co., today reiterated his view that the stock will be worth 7 pence in a year’s time, which would imply a decline of about 70 percent.

Consensus estimates for 2013 earnings are too high, French, who maintained a sell rating, said in a note. The company should sell new shares to raise cash and the U.K. retail business should be put into voluntary administration to ensure its long- term competitiveness, he said.

Investec’s price target is almost 40 percent higher than the next highest of the 12 other estimates tracked by Bloomberg. The lowest is 6 pence, set by Richard Stuber at Nomura International Plc. Ed Birkin, an analyst at Barclays Plc, today reiterated his 8 pence 12-month target.

To contact the reporter on this story: Peter Woodifield in Edinburg at pwoodifield@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net


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