Goldman’s buy rating spurs Air Arabia to 5-year high

Air Arabia surged to the highest level in almost five years as volume jumped after Goldman Sachs Group upgraded the Middle East’s biggest no-frills carrier to buy.

By (Bloomberg)

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Published: Tue 16 Jul 2013, 1:49 PM

Last updated: Tue 7 Apr 2015, 5:21 PM

Shares of the airline jumped 5.1 per cent to Dh1.23, the strongest since October 2008, at the close in Dubai as volume increased to 122 million shares, 4.9 times the stock’s three-month daily average. Air Arabia was the biggest gainer in percentage terms on the benchmark DFM General Index, which rose 0.7 per cent, taking an eight-day rally to 8.7 per cent.

Air Arabia’s stock has advanced 7.9 per cent in the two days since Goldman Sachs raised the shares to buy from neutral with a price estimate of Dh1.54, a 25 per cent premium to today’s closing price. Nine out of 13 analysts have a buy rating on the Sharjah-based carrier, according to data compiled by Bloomberg.

The UAE and Qatar were upgraded to emerging-market status last month by MSCI. Both the rating upgrade and the MSCI boost spurred the shares on Monday, according to Amer Khan, a Dubai-based director at Shuaa Asset Management. Dubai’s bid to host the World Expo 2020 may be the next catalyst, which “would bode particularly well for the likes of Air Arabia”, he said.

Air Arabia’s first-quarter passenger traffic rose to a record 1.45 million, the airline said in April. The company said last month it plans to start flights to the capital of Armenia in August, the fifth new route in 2013 and its 86th globally. The airline may post a nine per cent increase in full-year profit to Dh457 million, according to the mean estimate of eight analysts compiled by Bloomberg.



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