Up until mid-May, things weren’t going too badly for the FTSE 250 firm. Though it had gradually slipped from an opening price of £1.22 to £1.15 by late April, a rally in the first half of May saw it strike £1.50, however briefly, for the first time in 3 years.
Well, it now looks like it is going to take about that time again to get back to those levels. The last few months have been utter carnage for the holiday purveyor, an accelerated decline that left it at a near 6 year low of 40p by late October. Thomas Cook Group now sits at a current trading price of 45.15p.
Its most recent dive lower came following September’s pre-close trading update, in which Thomas Cook issued its second profit warning in 5 months. Though summer 2018 saw a return to popularity for previously flagging destinations like Turkey and Tunisia, the European heatwave caused many customers to spend June and July ‘enjoying the sunshine at home and put off booking their holidays abroad’. This caused ‘tougher competition’ and ‘higher than usual’ discounting in the August and September ‘lates’ market.
This means that the company is now forecasting full year underlying operating profit of around £280 million, substantially lower than both the previously estimated £323 million to £355 million, and 2017’s £330 million.
With expectations at rock bottom, Thomas Cook really needs to beat those aforementioned estimates on Thursday 29th November if it is to inspire a significant rebound. Any word on current trading and its 2019 outlook will also be important.
Thomas Cook Group PLC has a consensus rating of ‘Hold’ alongside an average target price of £1.10.
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