Market-wise 2017 was truly fantastic for Wizz. Its stock price more than doubled across the 12 months, rising from £17.92 at the start of January to £36.82 by December’s close.
Since 2018 began, however, the company hasn’t been able to rustle up that same level of enthusiasm from investors. Despite briefly hitting an all-time high of £38.20 in late January, Wizz has found itself gradually sliding lower. Every rebound has been greeted with a sharper decline, eventually causing the firm to hit a 6 month nadir of £30.83 in mid-May. Wizz Air Holdings PLC now sits at a current trading price of £31.30.
Part of the company’s 2018 pull-back stems from its Q3 update at the end of January. Now, there was a LOT to like about this statement. For the 3 months to 31st December Wizz Air carried 7.1 million passengers, a 24.3% surge year-on-year and a record quarterly performance boosted by the airport slots taken at Luton and Vienna following the collapse of Monarch and Air Berlin respectively. Revenue, meanwhile, followed a similar path, shooting up 24% to €422.9 million.
However, this growth came at a cost, as pre-tax profit for the quarter plunged 56% to €14.6 million. That’s because total operating expenses jumped 25.4% to €408.2 million, due to a combination of its record-breaking performance and the rising cost of fuel, which was up 33.4% for the quarter to €118.8 million. That latter increase caused Wizz to revise its forecasts for the year, with fuel costs expected to rise 5% against the previously stated 3%.
In terms of Thursday’s results, all eyes will be on the impact of those aforementioned fuel costs. Elsewhere Wizz Air expects net profit to come in between €265 million and €285 million.
Wizz Air Holdings PLC (LON:WIZZ) has a consensus rating of ‘Buy’ alongside an average target price of £34.55.
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