Turkish Airlines, which almost tripled last year, rose to its highest level in more than two weeks after UBS AG upgraded it to buy on expectations of stronger fourth-quarter earnings and passenger growth this year.
The shares rose 4.1 percent to 7.08 liras at the close in Istanbul, their highest level since Jan. 29, with trading volume more than double the stock’s three-month daily average. The ISE National 100 Index gained 0.7 percent to 78,081.40 points, climbing for the first time in three days.
The airline may report stronger earnings for the last three months of 2012 even though that is a “seasonally weak quarter,” Anuj Mehrotra, an Istanbul-based analyst at UBS, said in an e-mailed report today. The carrier has “already had a good start” to 2013, with rising passenger figures reported yesterday, Mehrotra said.
Turkish Airlines will probably report a profit of 144.4 million liras ($81.6 million), according to the average estimate of seven analysts polled by Bloomberg. That compares with a net income of 494.7 million liras in the final quarter of 2011. The full-year profit is expected at 1 billion liras, according to the average estimate of 22 analysts in a Bloomberg survey. The company may report 2012 results on April 12.
The airline said yesterday passenger numbers grew by an annual 23 percent to 3.2 million in January. Load factor, or percentage of seats filled with paying passengers, climbed by 3.3 percentage points to 75.9 percent.
“Prospects of better economic growth in Turkey this year, combined with fleet expansion and the addition of new destinations, will continue to drive double-digit growth,” Mehrotra said in the report. Forecasting a 19 percent gain in passenger traffic for the carrier this year, the analyst raised his 12-month price target to 7.81 liras from 4.7 liras, implying an advance of 10 percent from today’s price.
Turkish Airlines, which surged 195 percent in 2012, trades at a price-to-earnings multiple of 6, compared with 9.8 for Russia’s OAO Aeroflot, 10.4 for China’s China Eastern Airlines Corp. and 10.4 for PT Garuda Indonesia, data compiled by Bloomberg show.