Deutsche Lufthansa AG is facing long-running “profound” problems ahead, according to Stifel Nicolaus & Co. analysts, who cut their price target to a new low and urged clients to sell the stock. 

The German carrier is growing capacity too quickly and will continue to face pressure on pricing and costs, according to Johannes Braun. He cut his price target to €4.50, a new low among analysts tracked by Bloomberg and one that implies about a 20% drop from current levels. Lufthansa shares fell as much as 3.1% on Monday. 

“There is too much inefficient capacity growth despite yield weakness, combined with perceived product shortcomings and uncompetitive cost structures,” Braun wrote in a note, cutting his rating to sell from hold.

Lufthansa has been beset with problems throughout 2024. The German carrier cut its profit outlook last week and recently warned employees in a letter that it would need to cut costs further because stiff competition is driving down fares and corporate travel has not rebounded sufficiently. The stock is down 29% this year.

More broadly, airlines in the US and Europe are coming under pressure as they struggle to fill seats during the key summer season, weighing on fare prices. Delta Air Lines Inc. offered a grim assessment last week as it reported worse-than-expected financial results and a weak outlook for the current period. 

--With assistance from Jan-Patrick Barnert.

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