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Thomas Cook a 'compelling recovery play' for Jefferies
The chance to regain lost demand for its Eastern Mediterranean and North African offerings makes package holiday provider Thomas Cook a "compelling recovery play", said Jefferies.
Jefferies analysts signalled that Thomas Cook's 10% increase to its airline capacity throughout the first quarter, helping it tap into ancillary sales and regain some of its lost customers in the Eastern Med market, should drive a step change in organic growth.
The broker believes that Thomas Cook's self-help programme is beginning to bear fruit, with the potential for job rationalization to come through recent innovative partnerships with the likes of Expedia.
Jefferies initiated coverage on Thomas Cook with a 'buy' rating and a price target of 180p on Monday, noting that capacity gaps left in the wake of Air Berlin and Monarch's recent collapses would introduce new angles for revenue improvement.
"We conclude that a consumer downturn is not necessarily a material risk to the package holiday and that Thomas Cook stands to benefit from the structural growth of an ageing population," the analysts wrote.