Broker snap: TUI hit by Thomas Cook's woes, Peel Hunt cuts target

23rd Nov 2011 13:41

Peel Hunt has assessed the impact that Thomas Cook's travails have had on sector peer TUI Travel, which dropped 9% yesterday on the back of concerns surrounding its rival.Thomas Cook revealed yesterday that it would delay the release of its results until it has asked its banks about borrowing more money, due to a "deterioration of trading in some areas of the business in the current quarter". Analyst Nick Batram said that the company's woes "are not good for the industry in general and, as we saw yesterday, the market is nervous of the implications for TUI Travel. In the short term, this is likely to hold the stock back."The broker says that general market conditions remain challenging, given the Eurozone crisis, ongoing troubles in the Middle East and North Africa region (MENA) and flooding in Thailand. Nevertheless, Batram assured that "whatever unfolds at Thomas Cook, there is likely to be a market share opportunity for TUI Travel."Peel Hunt keeps its hold rating on TUI Travel but cuts the target price from 170p to 140p. A sell recommendation on Thomas Cook is maintained.Both stocks roared higher on Wednesday, recovering after yesterday's sell-off. By 13:40, Thomas Cook was up 21.57% at 12.4p, while TUI Travel was 12.44% higher at 153.7p.BC