EasyJet share price forms a golden cross after analyst upgrade
- EasyJet stock has formed a golden cross pattern on the daily chart.
- Analysts at Deutsche Bank believes the stock has a 20% upside.
- The company has a solid balance sheet as the aviation industry recovers.
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EasyJet (LON: EZJ) share price is having a spectacular year as European travel jumps above pre-pandemic levels. It has also jumped after it published spectacular financial results followed by multiple analysts’ upgrades. The stock jumped by almost 5% on Tuesday, making it one of the top-performers in the FTSE 250 index.
Deutsche Bank upgrades EasyJet
EasyJet stock has outperformed other European airline companies IAG and Wizz Air. As I wrote in my EasyJet vs IAG article, the company’s focus on leisure coupled with its strong balance sheet makes it a good airline stock to buy. EasyJet has a net debt of just £0.7 billion and cash and equivalents worth over 3.6 billion pounds.
EasyJet published strong financial results three weeks ago. Its bookings surged to a record high during the Christmas season. At the same time, its forward bookings for summer holidays were over 60%. Its passenger numbers increased by over 50% year-on-year while its pre-tax loss narrowed to about 133 million pounds.
Recent trends are supportive of EasyJet and other regional airlines. For example, jet fuel prices have been relatively stable recently while inflation is easing. Falling prices in Europe mean that more people will budget to travel during the holidays.
In a note on Monday, the Civil Aviation Organisation (CAO), predicted that demand for commercial travel would make a full recovery this year. Leisure travel has recovered at a faster pace than business travel. As a regional airline, EasyJet is benefiting from these trends.
As a result, analysts are enthusiastic about the EasyJet share price. In a note on Tuesday, analysts at Deutsche Bank upgraded the company to a buy and placed their target to 580p. This target is about 20% above where it is. JP Morgan analysts, on the other hand, boosted their outlook from 310p to 370p. UBS and Bernstein expect the shares to rise to 600p and 500p, respectively.
EasyJet share price analysis
The daily chart shows that the EZJ stock has formed a rare pattern known as a death cross. This is a pattern that forms when the 200-day and 50-day moving averages make a crossover. It formed on February 7 of this year, meaning that the bullish trend has more room to run. The stock is also comfortably above the key support at 427p, the neckline of the inverted head and shoulders that I wrote in this report. It is also at the 50% Fibonacci Retracement level. Therefore, the stock will likely continue rising, with my target being at 600p.
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