Broker snap: Credit Suisse slashes its price target on Thomas Cook

14th Dec 2011 12:07

In a research note published this morning, analysts at Credit Suisse are highlighting the "soft winter (trading) picture" for package tour operator Thomas Cook. In their opinion it is so weak that, despite the company's management having "fleshed out" its turnaround plan and that a strategic review is now in place, they have been left with no choice but to slash their price target on the company's shares.Thus, Credit Suisse emphasizes how, "winter bookings are weaker in the UK and France relative to the September update and that capacity is to be lowered in most markets plus company notes margins generally lower given high input costs."On the other hand, these same analysts admit that UK summer 2012 bookings are running up by 8%, that the company has put in place a £110m turn-around plan and the fact that it is likely that all options for asset disposals will be put on the table."Lastly, and of great interest, Credit Suisse adds that, "visibility remains low and equity volatility will likely remain high: With the cash low point now only weeks away we believe the key to share price performance from here is disposal progress during 2012 that materially improves the balance sheet coupled with signs of trading stability although visibility on both remains low. We set a TP of 40p (versus 100p before) based on 4x our new 2012E EPS, given the 170% potential upside we retain an Outperform rating." AB