Is easyJet (LON:EZJ) in for a bumpy landing after next Tuesday’s first quarter results?
Having climbed from an opening price of £14.64 to a 2 and a half year-plus peak of £18.07 late-June, easyJet’s investors were suddenly in need of an oxygen mask, as the stock plunged all the way to 20-month lows of £10.31 by mid-December.
The company eventually ended the year at £11.07, and has only managed a gentle rebound since the start of 2019. easyJet PLC now sits at a current trading price of £11.84.
Despite this drastic decline in the second half of the year, the firm’s full year results weren’t half bad. With a record number of both passengers flown and load factor, easyJet posted a 16.8% rise in overall revenue to £5.9 billion alongside a 6.4% increase in revenue per seat to £61.94.
And even though headline cost per seat excluding fuel jumped 5.3%, it still managed a more than healthy 41.4% surge in pre-tax profit to £578 million, leading to a 43% hike to its dividend to 58.6p.
It even claimed bookings for next summer were ‘promising at this every early stage’, with 2019 ‘slightly ahead’ of 2018, and though it said revenue per seat at constant currency for the first half is set to be down by ‘low to mid-single digits’, this was in line with its previous guidance. Yet this wasn’t enough for investors, who still sent the stock lower.
As evidenced by the losses that greeted November’s figures, there are so many issues facing the airline sector at the moment – from Brexit to weak consumer sentiment to oil price volatility – that investors are going to want a lot of reassurances from easyJet on Tuesday. Signs that the drop in revenue per seat is going to be at the lower end of estimates could go some way easing investors’ fears.
EasyJet PLC has a consensus rating of ‘Hold’ alongside an average target price of £15.27.
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