Wizz Air Holdings Plc. : equity valuation

• Main Author: Futó, Marcell
• Publication Date: 2024
• Format: Master thesis
• Language: eng
• Source: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
• Download full: http://hdl.handle.net/10400.14/46125
• topic: Discounted cash flow; Equity valuation; Low-cost airlines; Relative valuation; Wizz Air

The purpose of my dissertation is to conduct an equity valuation of Wizz Air Holdings Plc., a Hungarian low-cost airline dominating the CEE market. The analysis aims to estimate a 1-year target share price for the airline, incorporating extensive data regarding the company, industry dynamics, and key economic trends. After presenting the commonly used valuation methods, the dissertation contains an in-depth analysis of the internal and external factors impacting Wizz Air. This is complemented by a detailed operational and financial analysis to identify the most important drivers of the company9s performance. In the forecasting process, I employ three distinct scenarios to capture the changing factors more efficiently accompanied by a detailed estimation of the capacity, unit revenues, and unit costs. The share price implied by the DCF model is defined by the application of two sets of probabilities to the scenarios, while the relative valuation is based on a limited peer group using forward multiples. The DCF model determines a share price of 117.6 GBP, as the multiple valuation suggests a price of 24.4 GBP. This significant difference supports the fact that the growth opportunities and current market trends vary enormously. By allocating a higher weight to the multiple valuation, my analysis concludes a share price of 47.7 GBP, indicating a potential 182% increase in the share price, therefore my recommendation for Wizz Air is a strong buy.