Numis is no longer bearish on easyJet (LON:EZJ), having lifted its revenue forecasts following the low-cost carrier’s latest update. The move comes after Deutsche Bank and JPMorgan hiked their price targets on the budget airline in the wake of the group’s results.
easyJet’s share price has fallen deep into the red in today’s trading, giving up some of the previous session’s gains. As of 14:27 GMT, the carrier’s shares were changing hands 1.52 percent lower at 1,653.50p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.12 percent higher at 7,652.89 points.
Numis lifts stance on easyJet
Numis lifted its stance on easyJet from ‘reduce’ to ‘hold’ today, after the airline’s first-quarter revenue rose 14.4 percent to £1.14 billion, above the broker’s forecast of £1.11 billion.
“This was driven by a beat on passengers flown (+8% reported versus Numis estimate of +6.1%) and +6.6% revenue per seat (RPS) at constant currency, significantly ahead of guidance of ‘low to mid-single digits’, and our forecast of +2.4%,” the analysts explained, as quoted by Proactive Investors.
With easyJet’s second-quarter RPS also expected to increase above the broker’s prior forecasts, Numis has raised its RPS expectations to 6.9 percent growth from a previous estimate of 2.9 percent for the first half and to a 1.1-percent gain from a 0.5-percent fall for the full year.
Industry turbulence benefits
Proactive Investors further quoted the analysts as suggesting that the higher RPS expectations were supported by the demise of its competitors, including Air Berlin and Monarch Airlines.
“The revision in RPS guidance has been driven by greater visibility on competitor capacity growth in 1H18 in its markets […], and increased short-term yield visibility on its own capacity given its earlier release and consequential higher forward bookings,” Numis pointed out.