The share price of easyJet PLC (GB:EZJ) was up 1.8% yesterday after analyst Muneeba Kayani from BofA double-upgraded her rating on the stock from Sell to Buy. Kayani also raised her 12-month price target on EZJ stock from 470p to 640p, citing the capacity constraints in Europe as a key factor.
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The stock continues its path to recovery following the impact of the pandemic. In 2023, shares showed resilience by gaining over 20% in trading.
EasyJet is the leading affordable airline in Europe, with operations in around 34 countries.
BofA’s Bullish View
Kayani holds an overall optimistic outlook driven by increased capacity, stable fuel costs, and a rise in holiday travel.
BofA raised its full-year pre-tax profit estimate for FY24 by 14% to £549 million. Kayani expects easyJet’s FY24 profit to be driven by a notable increase in passenger numbers, which she projects to grow by 36% year-over-year. The rising ASP (average selling price) for the seats is another positive factor for the company.
The analyst also believes that the stock is currently trading at a lower valuation, which is “unjustified,” considering the company’s earnings growth potential and a strong balance sheet.
For FY23 results, easyJet reported solid numbers, driven by robust travel demand and strong forward bookings. The company posted a profit before tax of £455 million, marking a substantial turnaround from the previous fiscal year’s loss of £178 million.
In a noteworthy move, the company also announced the reinstatement of a dividend of 4.5p per share for the first time since the onset of the pandemic.
Is easyJet a Good Stock to Buy?
As per the consensus among analysts on TipRanks, EZJ stock has been assigned a Moderate Buy rating. The company’s ratings consist of six Buy and five Hold recommendations. The easyJet share price target is 615.18p, which implies an upside potential of nearly 19% from the current share price.
