Deutsche getting on the bandwagon - these guys are probably the...

Deutsche getting on the bandwagon - these guys are probably the worst analysts in the business - 12 month Target in their 28 July update was 23c which was then then theoretical ex - price from the SPP which had just been announced. I don't think it traded below 27c and then... well the rest is history. I guess they only missed a chance to more than double their clients money - but hey that's why they get paid the big bucks ;-)!


Deutsche Bank - Equity Research
>
> Virgin Blue {Ticker: VBA.AX, Closing Price: 0.52, Target Price:
> 0.60, Recommendation: Hold}
>
> * FY10 PBT forecast of $41.0m, new TP of $0.60ps
>
> VBA has revised its FY10 PBT guidance from break-even to profitable
> but avoided quoting a specific number. We think this reflects the
> uncertainty in its near term outlook despite VBA acknowledging that it
> is currently operating profitably. We have revisited our forecasts,
> noted the new guidance as a continued sign of better domestic
> conditions in aviation and we now forecast an FY10 PBT of $41.0m (-$1m
> old) based on increased passengers, better yield and lower interest
> costs. Our new $0.60ps TP ($0.33ps old) reflect these improvements.
> HOLD on low TSR.
>
> * Lack of numerical guidance points to continued near term uncertainty
>
> We note that while VBA has guided for a profit in FY10 at its AGM, the
> lack of a numerical figure articulates that near term operational
> challenges still exist. We forecast VBA domestic to deliver an FY10
> PBT of $164.0m, countered by pre-tax losses of - $123.0m from its
> international operations (incl domestic NZ). Key drivers for the
> domestic performance are a strong 81% load factor and revised FY10
> yield of -1.0%pcp (-1.7%pcp old).
>
> * V Australia continues to de-risk & 50% of its DCF value included in
> TP setting
>
> VBA's international performance including that of V Australia (based
> on company guidance & recent DB Australasian Transport Conference
> industry feedback) is likely to remain weak for the foreseeable future
> although there are emerging signs of the outlook de-risking.
> We value V Australia at circa 13cps FY10 DCF (20cps FY11) and with the
> recent launch of the airline plus the progresses thus far in getting
> approvals for the strategic alliance with Delta Airlines, we have now
> included 50% of our V Australia valuation into our TP for VBA group.
>
> * Valuation of $0.60ps; Key risks are V Australia execution & yield
> recovery
>
> We value VBA using a combination of reintroduced DCF (13.7% COE) &
> peer PE (12.8x FY10) methods. Key risks include: forward bookings &
> yield outlook, fuel price, rates & FX changes, global shocks (e.g.
> terrorism, pandemic) and V Australia growth execution including V.
> Aus-Delta JV regulatory approval (details, p.5).