Broker snap: Evolution downgrades Thomas Cook to sell

22nd Nov 2011 09:42

Evolution Securities has downgraded its rating on Thomas Cook from neutral to sell, after the firm's announcement to delay the release of its full-year results due to finance renegotiations.Thomas Cook said it was going back to its banks because of a "deterioration of trading in some areas of the business in the current quarter". "The company is in discussions with its principal lending banks with regards to its facilities during the seasonal low period of cash in the business," Thomas Cook said.Evolution analyst James Hollins said: "We initiated on the tour operators on 10 November 2011, with a bearish view, describing the industry as having an awful outlook. Based on Thomas Cook's announcement this morning, we were not negative enough."The broker said that it was wrong to assume that the stock, trading at three times earnings, was cheap enough.The target price comes down from 55p to 35p."A more flexible financial structure and massive turnaround are required, however, and we recommend investors avoid the stock and industry," Hollins added.By 09:48, shares had tumbled a whopping 67.16% to 13.5p, down from yesterday's closing price of 41.11p.BC