Canaccord Genuity cuts Jet2 target price but sticks with 'buy'

(Sharecast News) - Canaccord Genuity has lowered its target price for Jet2 but kept a 'buy' rating on the stock, saying the holidays group has the potential to grow its market share while it maintains a strong balance sheet. Results from the travel operator on Wednesday delivered results in line with expectations, with adjusted profit before tax falling 6% to £544.6m over the year to 31 March on the back of weaker margins, but revenues rising 4% to a record £7.48bn.

Canaccord Genuity said it has raised its FY27 projections due to a better cost outlook and strong load factor (percentage of available seating capacity filled).

"We project FY28 to see a return to nearer to historical PBT margins, but now slightly dampen these due to the economic, fiscal and consumer risks from an untested potential new UK Prime Minister," said analyst Damian Brewer.

Nevertheless, the broker said it sees "strong share growth potential" as it penetrates the southern half of the UK.

Meanwhile, following Jet2's announcement of a £250m share buyback for FY27, Brewer said the company could have even more capital potentially available to allocate in the future, given its strong cash generation and headroom with current debt facilities.

The broker cut its target price for the stock from 1,900p to 1,750p, indicating further upside despite Wednesday's 11.4% jump to 1,510.05p by 1405 BST.