Stifel upgrades easyJet to 'buy'
By Michele Maatouk
Date: Wednesday 26 Jan 2022
(Sharecast News) - Stifel upgraded shares of budget airline easyJet on Wednesday to 'buy' from 'hold' and lifted the price target to 750p from 600p, saying it expects the company's targeted growth strategy to make the most of the unfolding pent-up leisure demand this summer.
"We also see continued solid ancillary revenue and 'easyJet Holidays' supporting the profit recovery," Stifel said.
It now models this year's unit revenue decline at 4% versus 2019 levels, up from a previous forecast for a 9% drop, keeping its ex-fuel unit costs estimate "cautiously" at up 5% and lifting its pre-tax estimate to "almost breakeven", versus a £204m loss previously.
Longer term, Stifel still expects structural pressure on margins and free cash flow. "However, positive momentum into the summer and an attractive" relative valuation are behind the rating upgrade.
At 1220 GMT, easyJet shares were up 4.7% at 632.40p amid a broader rally in the travel sector after the government confirmed that Covid tests for double-jabbed travellers arriving in England will be scrapped.
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