Broker snap: Investec pleased with Thomas Cook's financing talks

10th Apr 2012 11:04

Investec has maintained its buy recommendation for travel firm Thomas Cook after the group confirmed that it is in discussions with its banks on extending the maturity of its loans out to 2015 and beyond."This is stated in the press to be at more painful terms (talks of banks taking 5% of equity) but, we think, this is a positive for Thomas Cook as fears over its near-term survival should go away, with the banks providing the support we had projected they would when we initiated with a buy," said analyst James Hollins. He says that Thomas Cook "remains a 'stub-equity' play" - high risk, but the company should be capable of driving equity value back into the business trading with the shares currently trading at just 2.5 times 2012 earnings.A 30p target price is maintained.BC