EV/EBIT a better ratio for airlines than EV/EBITDA, MS says
** EBIT is better than EBITDA when it comes to looking at airlines, Morgan Stanley says, saying they account for depreciation and maintenance costs in various different ways
** Moving to EV/EBIT valuations makes Air France-KLM AIRF.PA and Wizz Air WIZZ.L look expensive relative to peers, the broker says, and IAG ICAG.L cheaper
** It cuts Air France-KLM to "underweight", citing its exposure to corporate travel and eastern routes as well as negative FCF which MS expects in 2025 and 2026
** Though Lufthansa is also exposed to corporate travel, the broker nevertheless upgrades it to "equal-weight", saying a 21% fall in the shares YTD and a current EV/EBIT ratio of 7x vs 9x historically mean its shares have likely bottomed out
COMPANY | RATING | OLD RATING | PT | OLD PT |
|---|---|---|---|---|
LufthansaLHAG.DE | Equal-weight | Underweight | 7.00 euros | 6.20 euros |
Air France-KLM AIRF.PA | Underweight | Equal-weight | 9.40 euros | 7.10 euros |
Wizz Air Holdings WIZZ.L | no change | Equal-weight | 1,595p | 1,900p |
Ryanair HoldingsRYA.I | no change | Overweight | 21.00 euros | 21.30 euros |
ICAG ICAG.L | no change | Overweight | 3.20 euros | 3 euros |
Jet2 JET2.L | no change | Overweight | 2,125p | 1,950p |
easyJet EZJ.L | no change | Overweight | 685p | 740p |
Reporting by Louis van Boxel-Woolf
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