Deutsche Bank says you need to own these 10 transport stocks set to take off in the European recovery – including one that could gain 109%

  • As the European economy starts to recover, some of the hard-hit transportation stocks offer a cheap opportunity in the rotation to value.
  • Here are the 10 transport stocks that Deutsche Bank says you should own.
  • Visit Business Insider's homepage for more stories.

Positive news from Pfizer, Moderna, and AstraZeneca has fueled hopes of a way out of the coronavirus crisis, prompting optimism from investors on Europe's potential for economic recovery — exemplified by the recent rotation into value.

Moreover, armed with a huge €750 billion ($898 billion) recovery fund, the European Union has the ammunition to boost the economic recovery throughout the region. With this positive cyclical background, the transportation and airline business could benefit from pent-up demand, reigniting the beaten-down sector.

The Stoxx 600 — a European stock index — has risen by around 15% in November, its biggest one-month gain on record.

"We find it hard to believe that a crisis from which we expect the ULCCs under our coverage to emerge stronger cannot also be turned to the advantage of a LCC [low-cost carrier] like easyJet. As the group looks to build on changes that were afoot before COVID-19, we see significant opportunities for the proposition and cost base to be improved. We also see an attractive valuation — easyJet trades on 5.2x EV/EBITDA for FY23E; our revised €11.5 TP [target price] assumes 6.5x FY23E and implies over 30% potential upside," analyst Jaime Rowbotham wrote in the note published Friday.

The same is said for the airports business, according to analyst Siobhan Lynch. "In assessing the 2021 outlook for the European Airports, we have repositioned our stock preferences by raising Fraport to a BUY (from HOLD) with a new €60 TP [target price] (23% upside), maintaining BUYs on Aena with a new €164 TP (16% upside) and Flughafen Zürich with a new CHF 182 TP (16% upside), and maintaining a HOLD on ADP with a new €110 TP (4% upside)," they wrote.

easyJet

  • Ticker: EZJ.L
  • New TP: €1,150.00
  • Old TP: €550.00
  • Change: 109.1%
  • Recommendation: Buy

Fraport AG

  • Ticker: FRAG.DE
  • New TP: €60.00
  • Old TP: €35.00
  • Change: 71.4%
  • Recommendation: Buy

AIB Group PLC

  • Ticker: AIBG.I
  • New TP: €1.90
  • Old TP: €1.20
  • Change: 58.3%
  • Recommendation: Buy

Analyst commentary (Robert Noble): Closing the gap

AIB is hampered by inappropriately low leverage driven by unwarranted regulatory risk weights and an inefficient cost base. The new cost plan right sizes the employee and non staff costs in our view- but the high cost of labour means an efficiency gap will persist. The excess capital position is extremely attractive given the valuation and we retain our BUY recommendation and revise TP to €1.90 from €1.20.

International Airlines Group

  • Ticker: ICAG.LN
  • New TP: £220.00
  • Old TP: £175.00
  • Change: 25.7%
  • Recommendations: Buy

Ryanair

  • Ticker: RYA.I
  • New TP: €18.00
  • Old TP: €15.00
  • Change: 20.0%
  • Recommendation: Buy

Groupe ADP

  • Ticker: ADP.PA
  • New TP: €110.00
  • Old TP: €92.00
  • Change: 19.6%
  • Recommendation: Hold

A.P. Moller-Maersk

  • Ticker: MAERSKb.CO
  • New TP: DKK 15,500.00
  • Old TP: DKK 13,100.00
  • Change: 18.3%
  • Recommendation: Buy

Flughafen Zurich AG

  • Ticker: FHZN.S
  • New TP: CHF 182.00
  • Old TP: CHF 157.00
  • Change: 15.9%
  • Recommendation: Buy

Aena

  • Ticker: AENA.MC
  • New TP: EUR 164.00
  • Old TP: EUR 150.00
  • Change: 9.3%
  • Recommendation: Buy

Wizz Air

  • Ticker: WIZZ.L
  • New TP: £5,200.00
  • Old TP: £5,000.00
  • Change: 4.0%
  • Recommendation: Buy

Source: Read Full Article