No time to Easyjettison
INVESTORS in easyJet will have been well advised to fasten their seatbelts over the past six months. Shares in the budget carrier have soared since they hit a trough of 248.5p in the aftermath of September 11, and shareholders will be sitting on a tidy profit.
http://money.telegraph.co.uk/money/g.../cxquest09.gif But are there signs that the lifejackets under those no-frills seats may soon be required? Competition in the market is becoming increasingly intense, with new entrant bmi baby hoping to grab some market share from its more established rivals. Fortunately, demand shows no sign of slipping and the market is continuing to grow far faster than the number of planes. EasyJet yesterday announced that passenger numbers were up 39pc on the year, and the number of free seats fell even as routes and services increased. The company's decision to increase its fleet still further shows that it is serious about maintaining growth rates at similar levels in the future. In addition, industry analysts believe businessmen who have made the switch from first-class luxury to bargain-basement practicality in the face of economic woes are unlikely to switch back quickly. The only problem on the horizon for easyJet could be the current vicious jump in the oil price. The company does not hedge its exposure to oil, holding to the philosophy that what it loses on the swings, it gains on the roundabouts. Hence it is quite prepared to lose out when prices are high, so long as it can reap the benefits of cheaper oil at other times - as it has done for the past year. That may be true, but as we enter a period when a barrel of crude nudges ever closer to $30, investors may be concerned over the impact on earnings. At the moment the shares, down 4 at 511p yesterday, offer no dividend, but trade on around 32 times prospective earnings, which is a significant discount to Ryanair. The oil price conundrum will have a negative impact on the shares in the short-term, but if they can beat the turbulence, they should continue to soar. Source Airline news |
thought that, after nearly 600 replies, this deserved to register in the "replies" column.
good luck to the ever expanding easyEmpire. |
Iwas hoping to bank a 50% profit just before the share price slipped back. Now it seems I'm in for the longer term:-
LONDON (AFX) - Shares in easyJet PLC were lower in midday deals as valuation concerns, yield worries and fuel price caution led house broker UBS Warburg to downgrade its stance in the wake of the group's surprise trading statement, dealers said. The budget airline said this morning that it is likely to report a pretax profit contrary to expectations of a loss in its upcoming first-half results which are due May 8. The company also said substantially higher insurance premiums have been more than offset by favourable fuel prices, while better weather has resulted in lower disruption costs and control over costs have been strong. This followed easyJet's release of March traffic data yesterday, which indicated a first-half passenger volume growth to 34.3 pct with the seat load factor improving 3.6 pct to 84.2 pct, with a dilution in yield. UBS Warburg moved its stance to 'buy' from 'strong buy' in reaction, leaving its price target unchanged at 570 pence. UBS said the airline remains its favourite long-term play in the sector. But the Swiss broker now reckons that the stock "deserves a short term breather" in the face of increase fuel price risk. Following today's guidance, UBS upgraded first-half forecasts to pre-exceptional net profit of 8 mln stg, but built in a higher fuel cost and lower yield expectations for the second half, leaving full-year forecasts unchanged. However, it expected some potential upside, as new routes in the second half from Paris and Gatwick have the potential to create significant extra value long-term. The broker calculated that easyJet is now trading on an enterprise value of 300 pct of its fleet value, compared to rival Ryanair's 445 pct and the traditional airlines' 86 pct. Merrill Lynch was more upbeat on easyJet, repeating 'buy' advice. Its current full-year pretax estimate is 59.5 mln stg based on the assumption of a 35 pct increase in passenger volumes and a 3.5 pct decline in average yield. The data today would suggest its pretax estimate has the potential to be increased by up to 10 pct, the broker advised clients. On valuation, Merrill reckons the stock is at a 33.8 pct and a 28.3 pct discount to Ryanair against earnings for this year and next. The broker reckons this discount can narrow to 20 pct, leading it to recommend a price objective of 560 pence -- although it noted that potential revenue driven upgrades may be offset by a rising fuel price. Dresdner Kleinwort Wasserstein also kept a 'buy' stance and target of 718 pence on easyJet after the update. But the broker was leaving forecasts unchanged ahead of the results in expectation that yield forecasts may need tapering. Credit Suisse First Boston was another to recommend 'buy', targeting 550 pence for the stock. At 12.10 pm, shares in easyJet were down 11 pence to 500. bge/ob NNN |
"The only problem on the horizon for easyJet could be the current vicious jump in the oil price. The company does not hedge its exposure to oil, holding to the philosophy that what it loses on the swings, it gains on the roundabouts"
Funny, my mate in the City ( very French sounding name ) seems to think he has been buying fuel for EZY on the forward market for some time now!!! |
hmm... article in the Times today referring to EZY's trying for French slots referred to CDG as "Paris's Gatwick" with Orly as "Heathrow".
Shome mishtake shurely? Rest of it [AF shutting out nasty rosbifs] seemed to concur with a lot of stuff previously posted here. Why do I waste money on these damn newsrags :D |
What would be a reasonable price for GO shares when they float? Get in quick and all that.
MAX:cool: |
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