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Shares in travel giant TUI (TUI) are doing anything but take a holiday from their post-Brexit uptrend. The blue-chip has broken above 1100p to its best level since February, increasing the chances of a return to 2016 highs; 15% upside. Outperformance comes as investors welcome upgraded guidance. Management now expects underlying FY earnings growth (EBITA) of 12-13% at the end of this month, up from August guidance of ‘at least 10%’.
With Summer 2016 almost fully sold and Winter trading in-line with expectations, the message is reassuring shareholders, especially as outlook is king. Positive observations from the UK and Germany, in spite of Brexit, are also helping offset weakness in destinations such as Turkey and Egypt where security fears weigh.
Fortuitously, less exposure to such regions is playing in its favour with rival Thomas Cook Group (TCG) only able to reiterate guidance (which it had to downgrade in July) earlier this week. Nonetheless, TCG stating solid demand from the UK and Northern Europe makes for a largely positive sector message, the Brexit vote and worries about a weaker GBP proving far from the disaster many had expected.
Mike van Dulken, Head of Research, 28 Sept
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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