Budget airline easyJet has been upgraded from ‘hold’ to ‘buy’ by brokers following a strong first-quarter peformance.
The airline’s share price has risen to pre-Brexit price levels and is now trading at 1,582 after posting a Q1 revenue increase of 14.4% to £1,140m.
An extra 1.4 million passengers were carried over the three-month period, with easyJet generating a 6.6% increase in revenue per seat.
Ian Forrest, investment research analyst at The Share Centre, said he was now recommending easyJet as a ‘buy’ for medium-risk investors.
“While competition in the sector remains strong, easyJet is coping better than many others and has taken steps to ensure trading continues as normal after the Brexit settlement,” he said.
“When you combine this with the fact that economic growth across Europe is beginning to pick up and further growth opportunities therefore present themselves, we have taken the decision to upgrade our recommendation from a ‘hold’ to a ‘buy’.
Forrest said the group has benefited from increased demand for leisure and business travel around Europe.
Seat capacity is expected to increase by 5-6% in 2018 and the company plans to launch a full summer schedule from its new base at Berlin Tegel airport.
“Investors should also appreciate that easyJet has a relatively strong balance sheet and cashflow which enables it to pay good dividends and take advantage of opportunities to acquire useful assets when they arise,” he added.