The Share Centre upgrades easyJet to a ‘buy’

Ian Forrest, investment research analyst at The Share Centre, explains why he has upgraded budget airline easyJet from a ‘hold’ to a ‘buy’:

Article updated: 9 February 2018 10:00am Author: Ian Forrest

  • Group benefitting from increased demand in the sector and is coping better with competition than peers
  • First quarter results push share price to pre-Brexit levels
  • We currently recommend easyJet as a ‘buy’ for medium risk balanced investors

We recently commented on how easyJet’s first class Q1 results pushed its share price to pre-Brexit levels. While competition in the sector remains strong, easyJet is coping better than many others and has taken steps to ensure that trading continues as normal after the Brexit settlement. When you combine this with the fact that economic growth across Europe is beginning to pick up and further growth opportunities therefore present themselves, we have taken the decision to upgrade our recommendation on easyJet from a ‘hold’ to a ‘buy’ for medium risk investors.”

Looking at the business further, the group has benefited from the increased demand for leisure and business travel around Europe. The latest trading update was very positive with revenue up 14.4% to £1.14bn and revenue per seat up 6.6% on a constant currency basis. Interested investors should appreciate that seat capacity is expected to increase by 5-6% in 2018 and the company plans to launch a full summer schedule from its new base at Berlin Tegel airport. The arrival of the new CEO, Johan Lundgren, also provides the opportunity for a review of the company’s strategy.

Investors should also appreciate that easyJet has a relatively strong balance sheet and cashflow which enables it to pay good dividends and take advantage of opportunities to acquire useful assets when they arise.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.