WYNN ELLIS | NUMIS
The announcement will be of concern to shareholders, customers and suppliers. Thomas Cook faces a difficult near-term future which could lead to significant loss of market share. Turning the business around will also be tougher as suppliers are likely to be more wary of committing product to the company and extending credit terms. We have cut our recommendation from ‘hold’ to ‘reduce’.
NICK BATRAM | PEEL HUNT
The group is clearly in a very difficult position and it would appear that the route to recovery will have to be a lot more painful for equity holders than previously thought. Thomas Cook needs further assistance from its banks and this is unlikely to come cheaply or without preconditions which could involve equity. Therefore, the shares are best avoided until the picture clears.
JAMES HOLLINS | EVOLUTION SECURITIES
We initiated on tour operators on 10 November 2011 with a bearish view, describing the industry as having an awful outlook. Based on Thomas Cook’s announcement this morning, we were not negative enough... We move from ‘neutral’ to ‘sell’ with a cut of one third in our target from 55p to 35p. This may prove generous, although we think the company can survive given the solid returns from its ex-UK businesses.