Shares in easyJet (LON:EZJ) have fallen deep into negative territory in today’s session as analysts at UBS lowered their stance on the low-cost carrier. Proactive Investors quoted the broker as pointing to the airline’s ‘insufficient share and earnings upside’.
As of 13:26 BST, easyJet’s share price had lost 0.95 percent to 1,719.50p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.36 percent lower at 7,760.10p. The group’s shares have added just under 28 percent to their value over the past year, as compared with about a 3.3-percent rise in the Footsie.
UBS trims easyJet’s rating
UBS lowered its stance on easyJet from ‘buy’ to ‘neutral’ today, while hiking its price target on the shares from 1,800p to 1,900p. Proactive Investors quoted the analysts as explaining that while they considered the low-cost carrier one of the leading European short-haul operators, they were “not confident enough to flex our valuation multiple or 2018 earnings upward”.
“We think investors need to be disciplined at this point in the cycle and let earnings drive valuation rather than the expansion of the earnings multiple,” the broker pointed out. UBS expects pre-tax profit of £492 million in 2018, above the easyJet’s current forecasts of between £430 million and £480 million. Its estimates for 2019 are also ahead of consensus forecasts by seven percent.
Earlier this month, the FTSE 100 group unveiled that its half-year losses had narrowed as it continued to benefit from industry turbulence.
Other analysts on carrier
Credit Suisse reaffirmed the low-cost airline as an ‘outperform’ earlier this week, with a price target of 1,953p, while Sanford C. Bernstein, which is ‘neutral’ on the carrier, set a valuation on the shares of 1,550p last week. According to MarketBeat, easyJet currently has a consensus ‘hold’ rating and an average price target of 1,678.48p.