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Analysts positive on Easyjet after first-quarter results

By Alexander Bueso

Date: Tuesday 23 Jan 2018

Analysts positive on Easyjet after first-quarter results

(ShareCast News) - Credit Suisse upped its target price on shares of Easyjet following the budget carrier's first quarter update, while RBC Capital Markets upgraded its rating on the belief that London will see a shift away from reliance on Heathrow airport in coming years.
With the company guiding towards a rate of growth in revenues per seat in the high mid-single digits at constant currencies and thanks to lessened competition on Easyjet routes after rivals Monarch, Air Berlin and Alitalia went bakrupt, the Swiss broker raised its forecast for the company's 2018 profits before tax pre-Air Berlin by 10% to 568m.

That was in comparison with a consensus estimate for 505m before the release of the latest set of quarterly figures from the company.

The Swiss bank also called attention on new Easyjet chief Johan Lundgren's new-found focus on data management, including via the creation of the chief data officer role.

Analyst Neil Glynn reiterated his 'outperform' recommendation on the shares and lifted his target price from 1565p to 1803p, expecting that the carrier's pricing and momentum is set to continue into the second quarter.

Analysts at RBC Capital Markets were of a similar view, upgrading their recommendation on the low cost carrier's shares from 'sector perform' to 'outperform'.

In the same research note sent to clients on Tuesday, they revised their target price on the stock from 1,450p to 1,700p, saying that the LCC's growth and return expansion "were not priced in".

Among some of the keypoints driving their bullishness, they believed 2018-2019 would see a chance that major London rail infrastructure projects (Crossrail/Thameslink) would come to fruition.

As well, increased prospects for free cash flow generation at legacy airlines suggested increased odds of planned industry consolidation versus distress-led.

"We think buyers will likely focus on longer-term strategic value - potentially beyond the stand-alone value we see for easyJet."

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