easyJet share price drifts lower as Liberum turns bearish on stock

on Jul 26, 2016
Updated: Oct 21, 2019

Shares in easyJet (LON:EZJ) have fallen into the red in today’s session, after analysts at Liberum turned bearish on the budget carrier and trimmed their price target on the stock. The move follows the group’s third-quarter results earlier this month when the low-cost airline failed to provide profit guidance going forward.

As of 14:22 BST, easyJet’s share price had fallen 3.16 points to stand at 987.82p, underperforming the blue-chip FTSE 100 index which has climbed marginally into positive territory and is currently 0.32 percent up at 6,731.69 points. The airline’s shares have lost more than 42 percent of their value over the past year, as compared with a 2.3-percent rise in the Footsie.
Liberum trimmed its rating on easyJet from ‘hold’ to ‘sell’ today, and slashed its price target on the stock from 1,050p to 930p, arguing that the airline’s refusal to give any profit guidance just 10 weeks before the end of its financial year said much about the uncertain environment and the sensitivity of earnings to close-in summer bookings.

“The group’s long-term fundamentals remain attractive, but we fear further short-term pain from earnings downgrades,” the analysts were quoted as saying, adding that while disruption headwinds should fade next year, yield pressure from excess industry capacity and potentially fragile consumer confidence might not.
The comments came after easyJet said earlier this month that its total revenue per seat had dropped by 8.3 percent, attributing the weaker performance to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather. The company further noted that it was facing an uncertain quarter with security concerns and the UK’s vote to leave the European Union weighing on the group’s performance.
Blue-chip peer International Consolidated Airlines Group (LON:IAG) meanwhile is scheduled to update investors on its half-year performance on Friday.
As of 15:02 BST, Tuesday, 26 July, easyJet plc share price is 990.50p.