Key insights
- Morgan Stanley downgraded Lufthansa due to concerns about summer 2026 load factors, fading tailwinds, and increased competition from Middle Eastern carriers. Weak U.S. and German point-of-sale data and strike risks add to the negative outlook. While InvestingPro suggests the stock is undervalued, liquidity pressures and potential EBIT guidance revisions contribute to a slightly bearish signal for related US-listed travel companies.
Investing.com - Morgan Stanley downgraded Deutsche Lufthansa AG (ETR:LHA) (OTC:DLAKY) from Equalweight to Underweight on Tuesday and lowered its price target to EUR6.20 from EUR7.30. The stock currently trades at $9.18 with a market capitalization of $11.3 billion, down 3.67% year-to-date. Despite the downgrade, InvestingPro analysis suggests the stock remains undervalued, appearing on the platform’s most undervalued stocks list.
The firm previously downgraded Lufthansa from Overweight to Equalweight on April 1, 2026, citing the airline’s less favorable fuel hedging profile relative to peers and a longer-than-expected timeline for its cost saving plan.
Morgan Stanley said it is increasingly cautious on management’s bullish stance on summer 2026 load factors given limited visibility on late bookings. The firm said commentary around higher fuel pass-through exceeding 100% in the second half of 2026 suggests higher yields could weigh on demand, particularly as tailwinds seen in the first quarter of 2026 and to some extent the second quarter are likely to fade. The airline’s current ratio of 0.81 reflects liquidity pressures, with InvestingPro Tips noting that short-term obligations exceed liquid assets—a concern that adds weight to Morgan Stanley’s cautious outlook.
The firm said stronger Asia-Pacific and Africa demand trends are unlikely to persist as Middle East carriers recover capacity and re-enter the market with more competitive fares versus European airlines. Recent data suggests poor U.S. and German point-of-sale performance in April 2026.
Morgan Stanley said it sees growing risk to fiscal year 2026 EBIT guidance of significantly above last year’s EUR1.9 billion. Strike risk continues to be an overhang following an approximately EUR160 million impact in the second quarter of 2026.
In other recent news, Deutsche Lufthansa AG has been the focus of several analyst downgrades and operational considerations. Barclays downgraded Lufthansa to Underweight from Equalweight, citing concerns over the company’s revenue outlook and lowering the price target to EUR7.50. Analyst Andrew Lobbenberg suggested that Lufthansa’s guidance from its first-quarter results appeared overly optimistic. Additionally, Morgan Stanley also downgraded Lufthansa to Equalweight from Overweight, reducing its price target to EUR7.50 from EUR9.40. Morgan Stanley noted that the airline might pass through about 50% of higher fuel costs via pricing, adjusting its group passenger yield assumptions for upcoming quarters. Meanwhile, Lufthansa is contemplating grounding up to 40 aircraft due to the escalating conflict in the Middle East, as reported by Spiegel and Handelsblatt newspapers. This potential grounding is part of the airline’s crisis management considerations amid regional tensions.
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