easyJet share price extends slide as BofA Merrill Lynch trims rating

on Oct 7, 2016
Updated: Oct 21, 2019

Shares in easyJet (LON:EZJ) have fallen deep into the red today, extending the previous sessions’ slide, pressured by a recovery in oil, and after Bank of America Merrill Lynch trimmed its stance on the budget carrier. The move followed the airline’s trading update yesterday when easyJet said that it expected its profit to have fallen in the year ended September 30, and further cautioned that it was set to take a hit from the slump in sterling.

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As of 13:36 BST, easyJet’s share price had lost 5.20 percent to stand at 885.00p, underperforming the blue-chip FTSE 100 index which has climbed into positive territory and is currently 0.87 percent better off at 7,061.06 points. The airline’s shares have lost just under 47 percent of their value over the past year, and are down by nearly 50 percent in the year-to-date.
BofA Merrill Lynch trimmed its stance on easyJet from ‘buy’ to ‘neutral’ today, and slashed its price target on the shares from 1,300p to 1,050p. The analysts argue that the shares have limited upside potential until there is capacity constraint and/or yield momentum stability.
“The company has a relatively strong balance sheet, a business-oriented airport exposure (which is poised to take share over the legacy carriers in the long-term) and a well-respected CEO at its helm,” the broker pointed out, as quoted by Sharecast, adding, however, that with a lack of pricing momentum, alongside the uncertainties facing the UK, and a lack of tangible cost savings in the next financial year, it was “hard to see how easyJet will regain its (much-needed) earnings momentum in the near-term”.
HSBC meanwhile reaffirmed its ‘reduce’ rating on the low-cost carrier with a price target of 800p, while Barclays continues to see easyJet as an ‘equal weight,’ valuing the shares at 1,050p.
As of 13:58 BST, Friday, 07 October, easyJet plc share price is 1,106.50p.


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