Wizz Air (LSE: WIZZ) shares climbed 10% in morning trading Friday (12 June), and it looks like there are a couple of reasons. Full-year results released the day before have to be one of them, giving the stock a 6% boost. We’re looking at a gain of more than 16% in just two days.
International Consolidated Airlines also rose, up 6.5% in morning trading. It seems the on-again/off-again talk of an end to the Iran conflict is lifting the whole aviation business. Oil prices are falling on the hopes of peace — with Brent Crude down under $82 per barrel at the time of writing. And that’s easing one of the industry’s biggest current pains.
Investing in an airline — particularly a smaller one like Wizz, with its £1.15bn market cap — can bring rewards. But the balance against risk in this business can be one of the hardest on the market to evaluate.
What were the results like?
Wizz Air is pitching its results for the year ended 31 March as something of a pivot. Net profit for the year did collapse by a shocking 99.4% to just €1.3m, from €213.9m the year before. But management sees this as a year of change…
The defining feature of the year was the set of strategic decisions we made to position the business for long-term resilience and competitiveness … With a clear strategy, a highly efficient operating model, a young fleet and financial resilience we are well positioned to deliver sustainable growth and create value over the long term.
— CEO József Váradi, FY26 results
How this might pan out in the coming year, though, is still very much an unknown. The company didn’t really offer anything, saying: “We are not giving guidance for F27 at this time of the year given the lack of visibility across our trading seasons, uncertainty related to the ongoing conflict in Iran and the closure of the Strait of Hormuz.“
Penetrating the clouds
To try to get a clearer view on what the future might hold, a few highlights from forecasts are useful…
- Net loss in FY27, with positive net income back on track in 2028.
- Negative price-to-earnings (P/E) in 2027, positive 8.4x in 2028.
- Net debt of €5.65m in 2027, up from €4.94bn.
So, City analysts think Wizz Air is in for another bumpy year before things start looking up again. And that’s reflected in their price targets. With the shares closing at 1,025p on Thursday, the current target range runs from as low as 477p to 1,033p.
I expect those are likely to be lifted following the latest developments. But they’re not exactly a shining endorsement. It’s reflected in a modest Sell consensus among the brokers making recommendations.
What to do?
I do think brave investors, who specialise in recovery growth prospects like this, could do well to consider taking a punt on Wizz Air shares now. But for most of us, I see lower-risk value elsewhere.
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Alan Oscroft does not hold any positions in the companies mentioned.
