CAIRO: AlembicHC cut its share-price target on Air Arabia and forecast a 5 percent drop in the low cost carrier’s 2011 profit citing rising fuel prices.
The brokerage, which retained a "neutral" rating on Air Arabia, cut its price target on the stock by 17 percent to 0.88 dirhams.
"Signs of yield recovery are positive, but 2011 is likely to be another challenging year in light of high fuel prices," the brokerage said.
AlembicHC, which forecast 12 percent year-over-year revenue growth for 2011 at the Arab world’s largest listed airline, expects fuel costs to grow 23 percent in the same period.
The brokerage expects net cash at Air Arabia to drop more than 50 percent in 2011 and sees the company shifting to a net debt position in 2012.
Shares of UAE-based Air Arabia were trading up a percent at 0.83 dirhams by 0830 GMT on Thursday.
