Taking the normalised EPS forecasts (fromShareScope, hence Hemscott) for 2006, 2007, 2008 of 19.42p, 28.95p and 30.08p and giving a modest PE of 12, you arrive at target prices of 233p, 347p and 360p. So reasonable upside over the medium term IMO.
Some might be interested in week old IC view below:
23 December 2005 Investors Chronicle
MYTRAVEL (MT.S)
Can MyTravel go from being a battered suitcase to designer luggage? The tour operator is certainly showing promising signs of improvement. Given the challenges faced by the holiday industry - including natural disasters, terrorist attacks and sky-high jet fuel costs - its recent performance is impressive. First-half operating profit, before exceptional items and goodwill amortisation, surged from £12.9m last year to £55.2m. And the recovery would have been even better, but for the various disruptions encountered.
Crucially, MyTravel now seems to have a much better grip on supply and demand trends. By offering fewer packages, the company is selling more holidays at full price, rather than at discounted rates at the last minute. And management says that it "continues to focus on profit margins, rather than volumes". It aims to make all its divisions profitable in 2006, and is targeting an operating margin of 3.5 per cent in the UK business in 2007.
The most obvious danger to MyTravel's turnaround is consumer weakness. For now, though, there's no obvious threat of imminent doom, with bookings for next summer said to be more or less in line with last year's level.
Broker Shore Capital expects full-year adjusted EPS of 14.7p, rising to 26.5p in 2006-07.
Last IC view: Good value, 5.68p, 1 Jul 2005 (prior to capital reconstruction)
IC View
MyTravel's recovery is well on track. So, although more risky than First Choice or Holidaybreak, the shares offer an intriguing opportunity. Buy.
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