Broker tips: EasyJet, Everyman Media, Pearson

Berenberg upped easyJet to 'buy' from 'hold' on Tuesday and lifted its price target on the stock to 800.0p from 720.0p, stating the airline's balance sheet was now fit to comfortably weather a weak winter period, while a potential dilutive equity raise no longer hangs over the shares.

"Looking beyond the next six months, the company is well placed to capitalise on improving industry pricing, with ancillary initiatives such as bag fees bolstering its unit revenue outlook," it said.

In addition, the bank said easyJet’s relatively high cost base and attractive market exposure make it a takeout candidate, opening the door to the next phase of market consolidation and limiting downside risk.

The German bank also said it now estimates shorthaul capacity at 85% of 2019 levels in 2022, "setting the scene for attractive pricing".

Analysts at Canaccord Genuity changed their rating on cinema operator Everyman Media from 'under review' to 'buy' on Tuesday, stating the group had been "shaken but not stirred".

Canaccord said after a "challenging" 18 months since the start of the Covid-19 pandemic, where the focus was on cost control and cash preservation, Everyman was now dialled in on recovery and the "significant growth potential" from the expansion of its portfolio.

The Canadian bank thinks the 2022 trading year will be "a year of recovery" but with "significantly improved profitability" when compared to 2020 and 2021, with trading expected to recover back to pre-pandemic levels thereafter.

Canaccord, which lowered its target price on the stock to 245.0p from its pre-review 300.0 price target, also highlighted that much work had been done to improve Everyman's customer offer in recent months, including enhancements to its food and beverage service with kitchen upgrades and menu additions, alongside the start of a wider site refurbishment programme.

The analysts also pointed out that after the enforced closure of sites for much of the pandemic, there was now an "exciting and varied" slate of new and upcoming film releases over the final quarter of 2021 and into 2022, including the new James Bond title.

Credit Suisse upgraded its stance on shares of education publisher Pearson to 'neutral' from 'underperform' on Tuesday as it cut its price target to 680.0p from 750.0p following a share price correction after the first-half results.

The bank said Pearson's nine-month trading update earlier in October was weaker than it expected and "not very comforting" on the financial and strategic progress in Higher Education courseware, especially on the relatively slow start for paid subscriptions to the Pearson+ App.

"Assessment was stronger than we expected, but Virtual Learning was weaker," it said. As a result, the bank cut its estimate for adjusted earnings per share by 3.8% to 32.8p in 2021 and by 7.8% to 37.9p in 2022.

"However, after a circa 30% share price correction since H1 2021 results, our new discounted cash flow derived target price of 680.0p justifies an upgrade of our rating," it said.