TUI share price and Q1 earnings results preview

When are TUI’s results expected?

TUI is set to release its first quarter (Q1) 2023 results on 14 February 2023. The results are for the fiscal quarter ending December 2022.

What is ‘The Street’s’ expectation for the Q1 results?

‘The Street’ expectations for the upcoming results are as follows:

Revenue of €3,714 billion : +56.77% year-on-year (YoY)
Headline profit (EBIT): -€132 million : -36.4% (YoY)

TUI reported a headline profit (EBIT) of €1.039bn in the final quarter of its financial year, from July to September 2022, bringing its full-year earnings to €409m, compared to a €2bn loss a year earlier. With Covid-19 restrictions being lifted, revenue more than trebled to €16.545bn which helped net debt fall by around a third to €3.4 billion.

Investors will keep a close eye on how TUI plans to repay its debt and the €730m German government Covid-19 state aid as the company apparently plans to raise between €1.6bn and €1.8bn this year by issuing new shares equivalent to approximately 50% of the group’s current market capitalisation. This still needs shareholder approval, though. The Q1 earnings update will probably address the rights issue which may dampen the TUI share price.

TUI, just like Ryanair and easyJet, is expected to see strong sales despite the cost-of-living crisis, as Europeans wish to go travelling again, following years of Covid-19 induced uncertainty.

TUI, Europe’s largest travel operator, is likely to have regained market share from online independent travel sites as ATOL protected and all-inclusive holidays give cost-conscious holidaymakers certainty at a time of economic upheaval.

The surge in demand for travel seems to continue despite soaring inflation and prices having risen by around 25% between October 2022 and February 2023 compared to the same period in 2018-19, with UK sales significantly ahead of where they were before Covid-19 hit.

How to trade TUI into the results

Refinitiv data shows a consensus analyst rating of ‘hold’ for TUI – 1 buy, 6 hold and 5 sell - with the median of estimates suggesting a long-term price target of €1.76 for the share, roughly 10% lower than the current price (as of 13 February 2023).

IG sentiment data shows that 98% of clients with open positions on the share (as of 13 February 2023) expect the price to rise over the near term, while 2% of clients expect the price to fall whereas trading activity over this week and month showed 100% and 64% of sells respectively.

TUI – technical view

TUI’s share price, which surged higher at the beginning of this year and is still up 24% year-to-date, stalled around the May 2022 low when it made its €2.209 mid-January high, and has since given back around 9% of its gains with further losses looking likely.

This is despite the share price cutting through its 2018-to-2023 downtrend line in early January and rallying sharply in the past few weeks, since the advance from its €1.165 multi-decade low looks like an Elliott wave abc zig-zag correction.

TUI Weekly Chart

Therefore, as long as the €2.209 mid-January high isn’t overcome, a slip back towards the €1.904 late January low and the August 2022 high at €1.874 is on the cards. Further potential support between the November and December highs at €1.790 to €1.760 may also be reached, as could the breached five-year downtrend line at €1.67.

TUI Daily Chart

If the chart pattern does turn out to be an Elliott wave zig-zag correction, new multi-decade lows may be seen. For this to become more likely, a fall through the December low at €1.50 would need to be seen.

Were the share price to rally on better-than-expected earnings, however, and exceed the €2.209 January peak, the late May 2022 high at €2.339 as well as the early May 2022 low at €2.51 would be in focus.

Summary

TUI is set to release Q1 2023 results on 14 February 2023.

Q1 2023 results are expected to show a 56.77% YoY increase in revenue.

Revenue is expected to be boosted by increased market share and solid sales as Europe’s largest travel operator tries to raise between €1.6bn and €1.8bn this year by issuing new shares equivalent to approximately 50% of the group’s current market capitalisation in order to pay off some of its €3.4 billion debt.

Long-term broker consensus suggests the share to currently be a ‘hold’, with a median price target of €1.76 for the share, roughly 10% lower than the current price.

98% of IG’s clients with open positions are long the share but trading activity this week and month shows 100% and 64% of sells respectively.

The TUI share price started the year off on a strong footing and currently trades around 24% higher than at the end of December but is short-term topping out and likely to slide over the coming days and weeks towards the €1.904 late January low and the August 2022 high at €1.874.