Hargreaves Lansdown argues that despite the more positive outlook for easyJet (LON:EZJ), there may be more turbulence, Citywire reports. The comments came after the low-cost carrier updated investors on its third-quarter performance yesterday, and hiked its headline profit before tax for the full year.
easyJet’s share price soared in the previous session as investors cheered the results, adding 2.15 points to close at 1,688.50p. The stock outperformed the broader UK market, with the benchmark FTSE 100 index gaining 49.95 points to end the session 0.65 percent higher at 7,676.28.
HL weighs in on easyJet’s results
Citywire quoted Hargreaves Lansdown analyst George Salmon as commenting yesterday that easyJet’s move to hike its profit before tax hinted that “the overcapacity headwinds that have plagued the sector might be starting to ease”. The blue-chip carrier now expects to deliver headline profit before tax for the 12 months to September 30 of between £550 million and £590 million, up from previous guidance of between £530 million and £580 million.
“Reduced competition is a clear positive, but trends in the wider market are out of easyJet’s control,” Salmon pointed out. “We think the results it’s starting to deliver from self-help measures, such as the dramatic increase in ancillary revenues, are particularly encouraging.”
The analyst, however, further noted that operating costs and start-up losses from Air Berlin are higher than expected and likely to come under scrutiny from new chief executive Johan Lundgren.
Other analysts on budget carrier
Royal Bank of Canada and Credit Suisse, which see easyJet as a ‘buy,’ set price targets on the low-cost carrier of 1,900p and 2,059p, respectively. According to MarketBeat, the FTSE 100 company currently has a consensus ‘hold’ rating and an average price target of 1,790.12p.