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RBC Capital Markets lowers target price on EasyJet following H1 update
(Sharecast News) - Analysts at RBC Capital Markets lowered their target price on budget carrier EasyJet from 440p to 415p on Friday as a result of lower expected revenues and a further 6% increase in fuel costs. RBC Capital Markets cut its underlying earnings forecasts by roughly 37% on average over FY26-FY29 on both increased fuel costs and also a roughly 1% average cut to top-line forecasts following EasyJet's recent trading update. RBC also noted that year-ahead jet fuel forwards have edged up a further 10% over the last month.
The Canadian bank, which has an 'outperform' rating on the stock, stated EasyJet "now trades around some previous trough valuations" on price-to-book value and enterprise value-to-invested capital in "tough times", but it also noted that "tough times pass".
"Although we continue to see greater upside in some other 'outperform' rated airlines, we think this valuation limits downside risk, whilst leaving asymmetric upside potential if the geopolitical backdrop improves," it said.
"We are above the bottom end of consensus in FY26E, but at or around the bottom end of consensus beyond, not helped by a further increase in fuel unit costs (post hedges) in FY27E."
Reporting by Iain Gilbert at Sharecast.com
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