The TUI AG (LON: TUI) share price has risen 16.3% in the past month amid a broad recovery by UK stocks after the resignation of Liz Truss and the appointment of Rishi Sunak as the current Prime Minister of the United Kingdom.
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One might argue that TUI stock has benefitted from the board market rally, which has lifted most stocks in the past month, but the big question is, can TUI’s business support an extended rally? I’ll try to answer this question in the following paragraphs.
TUI’s last statement to the markets in late September reassured investors that the firm expected to return to “significant” positive underlying earnings growth in the current year. The travel and tourism company further added that it would deliver robust progress in the fourth quarter.
The company expected to beat the pre-pandemic figures reported in 2019 due to the intense summer travel demand almost at the same level as the summer of 2019. At the time, TUI expected the winter 2022/2023 bookings to be close to the 2019 level, with the bookings standing at 78% of Winter 2018/19 levels.
TUI noted that its hotels and resorts division was also doing well, as many airline passengers chose to stay at its hotels. In addition, the company highlighted the strong demand for its hotels and resorts in the Caribbean and the Canaries regions.
However, some analysts are concerned about the record high inflation in the UK and Europe, which could dampen demand for the company’s services. The UK and Europe are also expected to sink into a prolonged recession that could last for many months.
Still, the company was optimistic in its September statement, and investors are looking forward to its next update. The release should factor in the current economic situation and the latest booking data; hence, it should paint a clear picture of what is in store for the firm as we head into the new year.
Meanwhile, we could see TUI shares fall back and retest the 123p support level before rising if its prospects are promising.
*This is not investment advice.
TUI share price.
The TUI share price has rallied 16.34% in the past month as the UK stock markets recover. What’s next?