Lufthansa: Oddo confirms rating despite profit warning

(CercleFinance.com) - The Lufthansa share is tumbling around 12% on the Frankfurt Stock Exchange this morning after its profit warning for 2019.

The German airline now expects an operating margin of between 5.5% and 6.5% in 2019, against 6.5% to 8% previously, with adjusted EBIT of between 2,000 million euros and 2,400 million euros (against 2,696 million euros expected by the FactSet consensus and 2,869 million euros expected by Oddo).

Following this profit warning, Oddo confirms its buy rating on the stock, along with its target price of 26 euros.

This sharp fall is due to the deterioration of tariffs on the European market and particularly domestic flights (Germany and Austria), caused by overcapacity, as well as Lufthansa's strategy to defend its market share, Oddo explains.

There has been a significant deterioration at Eurowings, with an adjusted EBIT margin that is expected between -4% and -6%, against breakeven expected to date, with a "mid-single digit" decline in unit revenue, but also a delay in the reduction of the cost base, the broker adds



Copyright (c) 2019 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.