Kenya Airways’ share has dropped to a one-year low ahead of Friday’s announcement of annual results.
The share touched a one-year low of Sh10 in Tuesday’s trading, but recovered from the opening price of Sh10.15 Wednesday to gain 40 cents driven by bargain hunters seeking to capitalise on a possible recovery of the stock.
Kenya Airways announced a half-year loss of Sh4.8 billion in November, attributed to a drop in passenger numbers and a currency losses.
It followed it up with a profit warning to investors, indicating that full-year earnings will be at least 25 per cent less than last year’s income.
Kenya Airways has dropped 24 per cent in the year-to-date from June 2012 to Wednesday’s closing price of Sh10.55.
The national carrier has been the biggest loser at the Nairobi Securities Exchange last year, with a 45 per cent dip in price.
“The drop in price is about the market betting that we are about to hear bad news on the share,” said Suntra Investment Bank analyst Johnson Nderi. “However, when a share touches a low, some investors will be willing to pick it up in the hope that it may be under-valued.”
Citibank analysts in a research dated May 1 downgraded Kenya Airways share price target from Sh13 to Sh12.
In the analysis based on the airline’s performance in the March 2013 quarter, Citi projected the company’s net profit would fall due to an estimated nine per cent reduction in expected revenue from Sh101.9 billion to Sh98.3 billion in 2013.