Insider: have these two chiefs bought at the low again?

When two directors last bought shares in this AIM darling, the price rocketed. It will be interesting to see if they can pull the same trick a second time. 

Two Jet2 Ordinary Shares (LSE:JET2) directors who called the low for the holiday company’s shares during the pandemic, have invested a further £75,000 in the wake of fresh industry turbulence.

The latest purchases by chief executive Stephen Heapy and finance boss Gary Brown were made on Friday, shortly after Jet2 touched its lowest level since October 2020 at 748p.

Their previous entry into the market came on 19 March 2020 after Dart — as Jet2 was then known — lost two-thirds of its value in the industry tailspin caused by Covid-19.

They both bought 20,000 shares at 305.7p, which turned out to be the low point before a recovery back up to 1,200p following the discovery of a Covid vaccine in November 2020.

However, economic uncertainty and disruption at Britain’s major airports have resulted in a fresh retreat for Jet2’s stock market fortunes from 1,433p in February this year.

Its shares fell 12% on Thursday as an annual loss of £388 million was accompanied by a warning over limited visibility on bookings for the rest of this summer.

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The airline operator and UK's largest package holiday provider to many Mediterranean and Canary Islands destinations, also needs the aviation industry to return to some kind of stability.

Executive chairman Philip Meeson said airports and some of Jet2’s suppliers had been “woefully ill-prepared and poorly resourced” for the number of customers scheduled to travel.

This has meant additional costs from disruption to its flying programme. Meeson also expects the cost of living squeeze to put pressure on fares in the medium term, but believes his company’s end-to-end package holidays are “the right product for these tougher times”.

Customers are booking a little later than normal, but so far the average load factor for its planes this summer is only 1.4 percentage points behind the same point of 2019 despite a 14% increase in seat capacity. It is also encouraged that 35% of summer bookings are from completely new customers to Jet2.

Meeson added: “Despite the looming economic difficulties, for the long term we continue to believe that opportunities for us to grow share as a financially strong and trusted package holiday provider will only increase.”

Meeson’s boardroom colleagues backed up his optimism by purchasing shares at 804p on Friday morning, with the AIM-listed stock eventually finishing a difficult week at 815p.

Following the results, joint house broker Canaccord Genuity left its target price unchanged at 1,600p and said the current price looked like an “ultra-bear case” valuation.

Fellow broker Jefferies regards Jet2 as its top pick in the travel sector, noting the company is “highly attractive” on eight times 2024 earnings for a 35% discount to pre-Covid levels.

It reduced its price target by 100p to 1,650p to reflect a more conservative view on margins in 2023, but added that Jet2 has the “brand perception, operational flexibility and balance sheet” to gain market share.

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By not cancelling holidays and absorbing additional costs, Canaccord analyst Damian Brewer believes the company’s focus on maintaining high levels of customer service during the recent airport disruption will pay off in the longer term.

He said: “We see material opportunity for the confidence and loyalty this builds to pay back in 2023’s tougher market - as Jet2 gains repeat customers and takes market share based on its reputation for delivering holidays.”

Among other broker recommendations, Stifel has a price target of 1,500p and UBS stood at 1,335p prior to the results.

A FTSE 100 laggard at lowest in over a decade

A near-pandemic low for shares in Associated British Foods (LSE:ABF) has prompted one of its non-executive directors to spend £50,000 on increasing his stake.

Dr Wolfhart Hauser, who joined the board in 2015 after 10 years at the helm of current FTSE 100-listed stock Intertek Group (LSE:ITRK), made his investment on Thursday at 1,533p.

This compares with the low for the year of 1,462p in April and more than 2,100p as recently as January. His move was made a week after fellow director Emma Adamo spent £736,000 on shares at a price of 1,636p.

Sentiment continues to be shaken by uncertainty about how much rising costs and weaker consumer confidence will impact Primark and food and drink brands including Ovaltine, Ryvita, Kingsmill, Patak’s, Blue Dragon and Mazola.

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But with the FTSE 100-listed company trading on 6.4 times 2022 earnings, some 34% below its five-year average, there are plenty of analysts who back the stock.

They include Davy analyst Cathal Kenny, who noted recently that the strength of Primark’s business model and “obsessional focus” on price should help it in the current climate.

He added: “Through a period of economic dislocation, Primark’s value-led offering positions it favourably to at least hold market share.”

Kenny said the parent company’s strong balance sheet also offered protection and optionality, including for capital returns and acquisitions.