March 7th, 2024 | 06:45 CET
Buy recommendations for TUI and Saturn Oil + Gas share - Aixtron share price targets tumble
TUI was among the daily winners yesterday. The tourism group's share price rose by more than 5%. The reason was positive analyst commentary. The price target was raised, providing significant upside potential from the current level. Experts also recommend buying Saturn Oil & Gas. After a successful capital increase, the target price for the oil producer's shares was raised. Analysts see over 100% upside potential and scope for high dividends. At Aixtron, analysts' price targets are tumbling. There is even a sell recommendation. However, not all analysts are pessimistic; some see an opportunity in the price slide of the past few days.
time to read: 3 minutes
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Author:
Fabian Lorenz
ISIN:
TUI AG NA O.N. | DE000TUAG505 , Saturn Oil + Gas Inc. | CA80412L8832 , AIXTRON SE NA O.N. | DE000A0WMPJ6
Table of contents:
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Saturn Oil & Gas: Cash flow monster and soon a dividend monster?
According to Echelon Capital, Saturn Oil & Gas shares are inexpensive in a peer group comparison. The analysts are confident that the junior oil producer's shares will rise over the year and reduce the valuation discount. In 2024, the Company aims to reduce its debt further. Saturn is using the high cash flows from its oil business for this purpose and recently completed a successful capital increase. From the cash flow and the capital increase, the Company will have nearly CAD 200 million available this year to reduce liabilities and invest in the drilling program. Following the transaction, the analysts at Echelon confirmed their "Buy" recommendation for Saturn Oil & Gas shares and increased the price target slightly from CAD 5.65 to CAD 5.80. The share is currently trading at around CAD 2.40. Accordingly, the upside potential is over 100%.
The analysts expect Saturn to generate a free cash flow (FCF) of CAD 146 million from operations in the current year. To put this into perspective, the market capitalization of the Canadian company currently stands at CAD 386 million, which is only slightly more than 2.5 times the free cash flow. Saturn's FCF yield of 40.1% for 2024 is well above the peer group level of 8.1% (median). In the current year, analysts expect Saturn to repay more than CAD 100 million of the senior term loan with a total volume of CAD 223.1 million. The cash flow this will release in the coming year is a catalyst for the share as the capital could then be used for a dividend payment or share buybacks. If, for example, only 20% of the free cash flow were to be distributed to shareholders, this would correspond to a dividend yield of well over 5%.
Aixtron: Share price at EUR 24.60 or EUR 50?
Following a surprisingly weak forecast for the current year, Aixtron's share price targets are tumbling. But not all analysts are pessimistic; some see an opportunity in the share price slide of the past few days.
The Aixtron bears are led by UBS. The analysts have reduced their estimate for the plant manufacturer's earnings per share in the current year. Demand will likely not pick up again until next year. The price target for the Aixtron share has been reduced from EUR 26.90 to EUR 24.60, and the "Sell" rating has been maintained. The share is currently trading at just under EUR 28. Almost all other analysts have also reduced their estimates for 2024 and thus also their price targets. However, there are also "Buy" recommendations. Warburg Research has switched to the Aixtron bull camp. Although the outlook for 2024 is surprisingly weak, a positive development is expected in 2025. The price slide from around EUR 32 to below EUR 28, therefore, offers an entry opportunity. Although the price target has been reduced from EUR 36.40 to EUR 34.50, there is still enough potential to upgrade the share from "Hold" to "Buy".
Interestingly, Jefferies has the highest confidence in the Aixtron share. The analysts see the fair value at EUR 50 and also point to positive business development in 2025.
TUI: Morgan Stanley gives the thumbs up
The TUI share was clearly one of the winners in yesterday's trading session, gaining over 5%. Investors reacted to the latest study from Morgan Stanley. The analysts currently see far more opportunities than risks for the tourism company. The balance sheet problems have been largely resolved. Operationally, things are also looking good, and the forecast for 2024 is conservative. The analysts have, therefore, raised their rating for the TUI share from "Equal-weight" to "Overweight". The price target was raised slightly from EUR 9 to EUR 10. This makes Morgan Stanley one of the few analyst firms with a buy recommendation for the TUI share. Deutsche Bank is among the optimists, with a price target of EUR 10.50.
TUI is getting back on track after the balance sheet problems and the botched capital increase last year. The summer season also promises record bookings. The sell-off since December 2023 seems to have ended. Saturn Oil & Gas is a real bargain by industry standards. Once the debt has been reduced and the capital can be used for share buybacks or dividend payments, the share price should reach a completely different level. The sharp drop in the Aixtron share price is possibly an opportunity for long-term investors.
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