Can EasyJet (LON:EZJ) pull out of its recent nosedive following next Wednesday’s third quarter statement?
Having shot up from an opening price of£14.54, the airline spent the brunt of the first 4 months of the year failing to gain any traction, bouncing between £15.50 and £16.80. Yet it began to take off in May, its rise eventually leading to a 2 and a half year high of £18 by mid-June. Sadly, since then the stock has been in retreat, briefly falling to a 2 and a half month low of £15.70 on July 11th. easyJet PLC now sits at a current trading price of £16.07.
The company’s interim results back in mid-May contributed to its climb. For the first time in easyJet history H1 group revenue crossed £2 billion, surging 19.5% year-on-year to £2.2 billion, with total revenue per seat jumping 11% to £54.10.
And despite the headline cost per seat excluding fuel rising 2.2% to £43.11, the company nevertheless managed to reduce its pre-tax loss from £236 million in 2017 to £68 million, the still-present losses largely related to its new Berlin Tegel operation. Strip out that acquisition, bought off Air Berlin in January, and easyJet actually posted pre-tax profit of £8 million, the company benefiting from the collapse of Monarch and Alitalia.
The success of the first half prompted CEO Johan Lundgren to announce he intends to up the ante at easyJet Holidays, claiming there was ‘untapped’ potential given that it only has 500,000 customers booking hotels but 20 million flying with the airline.
In terms of Wednesday’s Q3 update, investors may want to hear more on what the plans are for easyJet Holidays. They will also want to see that the company is on track to post the previously promised £530 million to £580 million in full year pre-tax profit, a 36% increase year-on-year at the mid-point.
easyJet PLC has a consensus rating of ‘Hold’ alongside a consensus target price of £17.86.
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