Bank of America double-upgrades easyJet on EU capacity constraints

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Bank of America double-upgrades easyJet on EU capacity constraints
Credit: © Reuters.

Bank of America upgraded easyJet (LON: EZJ ) twice over, from an Underperform rating to Buy, and significantly raised their 12-month price target on the company’s shares to $640.00 (From $470.00) as analysts see growth benefiting from capacity constraints in Europe, a bigger Holidays contribution and stable ex fuel unit costs.

In 2024, Bank of America anticipates a 1% YoY increase in load factors due to capacity constraints in Europe and strong summer bookings. Despite the initial impact on regional bookings during the first half of the fiscal year from the Middle East conflict, analysts expect minimal disruption overall, as the peak summer season remains unaffected.

This positive outlook is supported by resilient RPS, which surpassed 2023 levels during the FY23 results in November.

Bank of America anticipates a significant expansion in holiday-related activities during FY24, which is expected to positively impact margins and cash flow. The growth is projected to result from increased passenger numbers and a rise in ASP.

Analysts highlight that, based on their FY24 estimates, the Holidays segment is now poised to contribute approximately one-third of Profit Before Tax

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