Too bad that they do not have a Put..
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BROKER CALL - HK's Cathay Pacific target price cut to 13.25 hkd - Morgan Stanley
HONG KONG (XFN-ASIA) - Morgan Stanley said it has cut its target price on Cathay Pacific Airways Ltd to 13.25 hkd from 14.25 due to surging oil prices.
It maintained an 'underweight' call on the stock.
"In view of record oil prices, we have cut our EPS (earnings per share) estimates by a further 11-15 pct by raising our average jet fuel spot forecast to 120 usd per barrel from 105 usd for 2008 and 2009," it said.
It noted that the stock could be hit further with potential earnings downgrades when direct air links are launched between Taiwan and China.
"We think passenger yield peaked in 2007 and that jet fuel prices will remain high for 2008. We believe the market has yet to factor in this negative trend for Cathay Pacific," it added.
Oil prices hit 124.70 usd a barrel in Asian trade today after closing at 123.69 usd overnight.
At 3.23 pm, Cathay Pacific shares were down 0.44 hkd or 2.71 pct at 15.8.