Shares in easyJet (LON:EZJ) have climbed into positive territory in today’s trading, outperforming the broader UK market, as Exane BNP Paribas hiked its stance on the low-cost carrier. WebFG News reported that the analysts like what they have seen from the budget airline’s new chief executive so far.
As of 13:19 BST, easyJet’s share price had added 0.89 percent to 1,752.50p, outperforming the benchmark FTSE 100 index which currently stands 0.23 percent higher at 7,730.08 points. The group’s shares have added more than 31 percent to their value over the past year, as compared with about a 3.4-percent gain in the Footsie.
Exane lifts rating on easyJet
Exane lifted its rating on easyJet from ‘neutral’ to ‘outperform’ today, also hiking its price target on the shares from 1,650p to 2,000p. WebFG News quoted the analysts as explaining that their previous stance reflected dual concerns over rising unit costs and a lack of free cash flow. While the broker remains concerned about the airline’s cost story, it argues that things have changed for the better.
Top-line growth outweighs analysts’ issues with costs, though some free cash flow concerns remain, slightly offset by accelerated A321 growth, compounded by improved underlying earnings.
Operating capacity shift impact
“We think that the market is continuing to underestimate the likely positive impact of the shift in the group's operating capacity in Europe near-term, while we are increasingly convinced that the higher guided unit costs will be repaid longer-term in improved profit per seat,” Exane pointed out, as quoted by WebFG News.
The comments came after the low-cost carrier updated investors on its May traffic, revealing that it had carried more passengers last month, despite a spike in cancellations.