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eDreams rises 300% from the March 2020 lows: how far can it go?

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The online travel agency eDreams It has been one of the best-performing titles this week on the Spanish Continuous Market. Specifically, in the last five sessions, it has appreciated by 15.53%, up to 6.10 euros, which has placed the group at levels not reached since 2018.

The sectoral rotation that is being seen in the parks, the confidence in a rapid recovery of the tourism industry in the heat of the advance in the vaccination process and the good reception that the accounts presented by the company have had have accelerated the comeback of a active that It reached a price of 1.50 euros in March 2020 (+ 300% since then), at the outbreak of the pandemic.

A spectacular rebound that has occurred despite the fact that the company announced on May 27 some net losses of 124.2 million euros in its last fiscal year (between April 2020 and March 2021), three times more than the red numbers of 40.5 million euros that it registered a year before, due to the mobility restrictions derived from Covid-19.

IMPROVE YOUR POSITION AND DIVERSIFY INCOME

However, the company has become the second in the world in flight intermediation (behind the Chinese Trip.com and relegating the American Expedia to third place), as explained by its CEO, Dana Dunne; who also outlined that the group faces its new fiscal year with “peace of mind by having a solid financial position”. "We are in a privileged place to emerge as winners of the crisis," added the manager.

Another of the strengths that eDreams has, according to analysts, is the diversification of income and the success of its Prime subscription service, which allows the company to have a more stable inflow of money.

A VALUE FOR RISKY INVESTORS

However, not all is good news for the agency. In this sense, Diego Morín, IG analyst, highlights that there is still "Significant uncertainties", such as the fact that the United Kingdom has kept Spain as an amber country within its epidemiological semaphore and advises against visiting it. Similarly, Income experts 4, in a report on the IAG airline group, comment that the tourism sector is now more appropriate for investors with a high risk tolerance. "These types of companies will find it necessary to allocate the cash generation of the coming years to reducing debt and other commitments, with little capacity to pay dividends or buy back shares."

TECHNICAL LEVELS TO MONITOR

From a graphical point of view, Diego Morín points out that the stock will continue to show favorable prospects in the short term while its price consolidate the 5.70 euros in a foreseeable profit-taking phase.

For its part, José María Rodríguez, analyst at ForexNews.online.com, who already announced months ago that eDreams was drawing a "double bottom with clear upward implications", now points out that "the share continues to have a path to 7.50 euros, although before it will have to overcome the important resistance of 7 euros, the upper part of the lateral-bullish channel through which the price has been moving since 2015 ”.

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