Thomas Cook shares fell back by 20% or 5.75p to 22.5p yesterday after takeover rumours earlier in the week subsided.
Investec cut its rating to “hold” little more than a week after sparking interest in Thomas Cook with a “buy”.
Analysts from the broker said the “gap between the shares pricing in failure and survival has been bridged”, and it moved its rating down with no certainty on moves to drive the shares higher.
With takeover hopes played down, Cook shares slumped 20.35% to 22.5p, although the level is still nearly 75% higher than last week.
Investec was also worried about the prospect of Europe’s second largest travel group having to raise cash, saying that its banks may demand a reduction on Cook’s debt, and “the most likely outcome in this scenario is the execution of an equity raise”.
Investec said last week that with the announcement of a new chief executive, due in the first half of this year, and a “supportive banking syndicate”, it thought “Thomas Cook will survive”.