12th May 2015
The Share Centre has rated EasyJet a ‘buy’ as the airline posts a £7m profit for the past six months, up from a loss of £53m last year.
Forward bookings are in line with last year and passengers are benefiting from competitive operating environment and lower fuel costs, the broker says.
Ian Forrest, investment research analyst at The Share Centre, says: “This morning, low-cost airline easyJet reported that it had moved into the black in the first half of the year and said forward bookings for the second half are in line with last year. Sales in the six months to March rose 3.8% to £1.77bn, with pre-tax profits coming in at £7m compared to a loss of £53m last year. Investors should also note that the group expanded the number of bases it operates from to 26. Furthermore, the company grew the level of available capacity on its aircraft as well as improving the average number passengers on each flight.
“Despite this solid set of figures, the market has reacted negatively to a lowering of expectations for the second half. The period has not started well for the company following some disruption in April from the French air traffic controllers’ strike and higher regulatory charges in Germany and Italy. However, investors should acknowledge that easyJet continues to grow its capacity and expects full year sales and profits to grow.
“We continue to recommend easyJet as a medium risk ‘buy’ due to its good growth prospects, the steady improvement in the underlying economic picture across Europe and an effective management team which has successfully refined the no-frills approach. The market’s reaction to today’s news looks overdone with the shares now trading on a very attractive 2016 PE of 11 and a healthy forward dividend yield of 3.7%.”