Stifel upgrades easyJet to ‘hold’, says dilution now priced in

by | Oct 25, 2021

Stifel upgraded its stance on easyJet to ‘hold’ from ‘sell’ on Monday following the £1.2bn capital increase and recent trading statement, but cut the price target to 600p from 650p.
“Our more constructive view is based on the share price now capturing the anticipated dilution and trading remaining benign for short-leisure (despite higher fuel prices and new Covid-19 variants),” Stifel said.

Stifel said the budget airline’s recent trading update confirmed positive booking trends for FY-21.

“Restrictions in the UK have greatly eased and especially for the October half-term there have been strong bookings,” it said.

“We believe that confirms the general industry trend of short-haul leisure pent-up demand being released, which we think will continue, despite new Covid-19 variants and higher fuel prices. Given the company’s attractive exposure to short-haul leisure (incl. easyJet Holidays), it will be a natural beneficiary.”

However, Stifel also said its longer-term strategic/structural concerns remain. “We still expect structural margin pressure and negative free cash flow for years to come due to upside pressure on costs and downside pressure on yields at the same time,” it said.

At 1120 BST, the shares were up 1.9% at 608.20p.

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