EasyJet share price braces for a big rally if this happens

on Apr 19, 2023
  • EasyJet stock has been in a strong recovery in the past few months.
  • The company published strong financial results this week.
  • A bullish breakout faces just one hurdle.

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The aviation industry has staged a strong recovery, with many companies reporting higher revenues than before the pandemic. As a result, most airline stocks have jumped sharply from their pandemic lows. EasyJet (LON: EZJ) share price jumped to a high of 527p, the highest point since May last year. It has jumped by over 85% from 2022 lows. The JETS ETF is ~24% above last year’s low.

EasyJet’s business is booming

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In March, I wrote a relatively popular article that compared EasyJet and IAG, the parent company of British Airways. In that report, I argued that EasyJet’s strong balance sheet and low cost business model made it the better investment. 

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Results published on Tuesday showed that the company’s business is booming. The number of passengers increased by 35% in the six months to March 31st. The company’s RPS jumped by 43% as its ticket yield rose by 31%. It had 1,600 flights per day during the Easter holiday.

In all, the number of flights increased to 99,273 in the second quarter while the load factor jumped to 88%. In the same period in 2022, the company carried 82k people and a load factor of 78%. Therefore, revenue for the first half of the year is expected to be between £2.69 billion and £3.1 billion. 

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Fundamentally, EasyJet is one of the best airline stocks to invest in. It has a large and growing market share in the industry. And the company is expected to have strong growth as the European economy expands at a faster pace than expected.

Further, EasyJet has a strong balance sheet after it repaid a 500 million euro bond. It now has a net debt of just £0.2 billion. Also, the company has a modern efficient fleet and growing ancillary revenue figures.

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EasyJet share price forecast

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EasyJet share price
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EZJ chart by TradingView

On the daily chart, we see that the EZJ share price has been in a strong bullish trend in the past few months. In this period, the stock has remained above the 50-day and 100-day exponential moving averages. 

A closer look shows that it now sits at an important resistance point where it failed to move above on April 13, March 7, and January 26th. Therefore, a move above this level will bring the next key resistance at 602p to view. This price was the highest level in April last year. 

However, we still can’t rule a major pullback since the stock seems like it has formed a triple-top pattern whose neckline is at 440p.

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