easyJet share price: Analysts flag more headwinds for airline

on Jan 23, 2019
Updated: Mar 11, 2020
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Interactive Investor sees more turbulence for easyJet (LON:EZJ), even with the group having weathered headwinds better than low-cost rival Ryanair (LON:RYA), Citywire reports. The comments came after the FTSE 100 budget carrier updated investors on its first-quarter performance yesterday, posting a ‘good start’ to the year.

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Investors reacted positively to the low-cost carrier’s update, sending easyJet’s share price soaring 6.28 percent higher to end the previous session at 1,234.00p and outperforming the benchmark FTSE 100 index which gave up 69.20 points to close 0.99 percent lower at 6,901.39. This morning, shares in the low-cost carrier have fallen into the red, having lost 0.55 percent to 1,227.70p as of 08:02 GMT, as compared with a 0.59-percent dip in the Footsie.

More headwinds ahead

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While easyJet posted a rise in first-quarter revenues yesterday, Citywire quoted Interactive Investor’s Richard Hunter as commenting that “as is often the case with the airline sector, headwinds abound”.

“Although the company declares itself well prepared for Brexit, it cannot control the effects which a poor outcome could have on consumer confidence,” he elaborated, adding that the overall margin between revenue and cost per seat was ‘wafer thin,’ and that new accounting practices would have a short-term negative effect, while the financial impact of the Gatwick drone chaos would have to be absorbed.

Hunter further noted that these concerns had weighed heavily on the shares, and that the 27-percent decline over the last year had left easyJet’s share price “flying perilously near the levels which could make it a candidate for FTSE100 relegation, which could leave investors twitching uncomfortably in their seats”.

Other analysts on easyJet

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Credit Suisse, which rates easyJet as a ‘buy,’ set a price target of 1,683p on the shares yesterday, while Royal Bank of Canada reaffirmed the low-cost carrier as an ‘outperform,’ valuing the stock at 1,600p. According to MarketBeat, the FTSE 100 group currently has a consensus ‘hold’ rating and an average price target of 1,472.16p.

As of 08:11 GMT, Wednesday, 23 January, easyJet plc share price is 1,240.50p.

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