Wizz Air share price could nosedive – Barclays

Wizz Air (LON: WIZZ) share price crashed by more than 5% on Friday after analysts at Barclays downgraded the stock to sell. It retreated to a low of 2,220p, its lowest level since May 31st and is about 12% below the highest level this year. 

Barclays downgrade Wizz Air

In a note, analysts at Barclays lowered their target to sell citing the rising competition, falling airfares, and its revenue growth. It also pointed to the ongoing engine issues since the company uses many planes made by Pratt & Whitney.

The downgrade came a month after the company published strong revenue and profitability metrics. Its total passengers rose by over 21.4% in the last financial year to over 62 million.

Its revenue jumped by over 32% to over €5 billion while its profit for the period surged to moe than €365 million. It also ended the year with a strong balance sheet with over €1.59 billion in cash and an investment grade rating. 

The company has been growing, helped by the strong traffic growth and its ancillary solutions like bundles, subscriptions, Wizz experiences, and Wizz Shop & Fly.

Wizz Air expects that its growth will continue in the current financial year. It sees its net income coming in between €500 million and €600 million this while its load factor will be 92%.

Wizz Air’s performance has mirrored that of other airlines. IAG’s stock price has crashed by almost 10% from the highest point this year while EasyJet has dropped by over 25% from the year-to-date high.

Wizz Air share price analysis

WIZZ chart by TradingView

The daily chart shows that the WIZZ stock price has crashed hard in the past few days. It has moved from this month’s high of 2,600p to about 2,230p. The stock has crashed below the key support at 2,426p, its highest point in April 24th.

Wizz Air’s stock has also moved to the 38.2% Fibonacci Retracement point. The two lines of the MACD have formed a bearish crossover while the Relative Strength Index (RSI) has crashed below the neutral point of 50.

Therefore, the stock will likely continue falling as sellers target the psychological level of 2,000p. The stop-loss of this trade is at 2,425p.

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