Kepler downgrades easyJet, slashes price target
easyJet
542.20p
10:45 25/04/24
Kepler Cheuvreux downgraded its stance on easyJet on Monday to ‘reduce’ from ‘hold’ and slashed the price target to 460p from 605p.
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"We consider deteriorating traffic trends coupled with slot requirements at European capacity-constrained airports to be increasingly likely during the current winter flight schedule," it said. "In such a scenario, we consider easyJet to be the most vulnerable company in our coverage."
Kepler said it expects easyJet to operate at least 50% of its pre-crisis capacities during the winter flight schedule in order to keep its portfolio of slots at capacity-constrained airports.
"With increasing number of infections, lockdowns being reintroduced in some countries, we see the risk easyJet will have to incentivise demand and stimulate load factors with significant fare discounts," it said.
Kepler also said it sees increasing political opposition to low-cost carriers in many of easyJet’s main markets post-Covid.
"EasyJet has a weak track record in terms of cost control, and we see rising costs as a major risk during the traffic recovery period," it said.
It also pointed to higher future environmental costs as a percentage of 2019 operating result than for any other airline in its coverage.
"EasyJet had a poor track record in terms of cost control pre-crisis and the airline has already indicated increasing costs in the future," it said.