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Jan 21 2019, 06:30 GMT
Ratings and price correct at time of issue
|Company||Rating||Date||Previous Rating||Date||Closing Price|
|Air France KLM||OUTPERFORM||21/01/19||Neutral||22/01/18||953c|
|Wizz Air Holdings||OUTPERFORM||20/06/18||Neutral||21/06/16||3014.0p|
We think earnings momentum in the European airlines sector will inflect positively as we exit the winter trading season. Industry consolidation, reduced capacity growth and moderating fuel costs should support EPS upgrades as the year progresses. Meanwhile, sector valuations are pricing in a much bleaker outlook, as evidenced by Ryanair’s muted share reaction to its guidance downgrade last week. Our preferred names are Ryanair and Wizz. We also think risk/reward screens attractively for Air France-KLM; with catalysts to come, we upgrade the stock to ‘Outperform’.