EasyJet share price forecast: Blown off course
The easyJet stock (EZJ) market price has been declining in the past couple of weeks as the war between Russia and Ukraine is threatening to disrupt multiple aspects of Europe’s economy including air traffic.
“EasyJet has been blown off course [on] its route back into the FTSE 100. It had been making great progress on its flight path to recovery but war breaking out on the doorstep of Europe has unnerved the market. Shares have fallen another 5.5% today [1 March], and are down 15% since Russia invaded Ukraine,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
The uncertainty of the situation and its potential ripple effects on the continent’s economy could affect the market’s consensus easyJet share price prediction. In this article, we will be discussing the latest easyJet share news along with the stock’s price action and fundamentals to outline plausible scenarios for the future.
EasyJet stock analysis: Technical view and price drivers
For market participants, an aggressive response from Russia to the European Union’s involvement in the armed conflict, along with operational disruptions caused by the introduction of no-fly zones, increased the pressure on airlines that operate in the region including easyJet.
The European Union Aviation Safety Agency (EASA) has published multiple guidelines in regards to how carriers should modify their operations amid the ongoing military conflict. According to the latest update from the agency, multiple air zones in Ukrainian, Russian, Moldovian, and Belarusian territory have been flagged as no-fly zones. Operators have been instructed not to operate in those areas.
EZJ shares were lifted in January by expectations that passenger volumes should continue to recover to pre-pandemic levels as the severity of the health crisis seems to be declining on the back of en-masse vaccinations and recently introduced anti-viral treatments.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “The reduction in travel restrictions announced by the UK government on 5 January and the further drop in testing requirements finally gave the airlines some good news, and easyJet saw an immediate boost in sales off the back of the announcements. That comes after a tough couple of months where Omicron fears and restrictions meant passenger load dropped down to 67% in December, with a further drop to 50% expected for January.”
However, February has been a negative month for easyJet amid the conflict between Russia and Ukraine. The recent decline in the EZJ share price sent the airline stock in the negative territory year-to-date as it has been trading 9.88% below its 2021 closing price as of 2 March.
At the time of writing, the stock has broken below a relevant support area at 565p per share. An escalation in the military conflict could accelerate the downtrend for EZJ, while peace talks and other resolutions that could possibly put an end to the situation might have a positive effect on the easyJet share value.
Momentum indicators at the moment (2 March) have been favouring a short-term bearish outlook with the relative strength index (RSI) standing at 33 (neutral) while the moving average convergence divergence (MACD) has moved to negative territory, indicating a ‘sell’ signal.
EasyJet fundamental analysis: Latest earnings
On 27 January, easyJet published a trading update covering the quarter ended on 31 December 2021. This is the first fiscal quarter of the company’s 2022 fiscal year.
Total group revenues for the quarter ended at £805m ($1.07bn), resulting in a significant improvement in the company’s top-line performance compared to the £165m it brought during the same quarter a year ago.
The number of flights operated during the quarter surged to 85,618 compared to 23,428 the airline operated in the first quarter of 2021. Meanwhile, the number of passengers that flew with the company moved from 2.86 million to 11.89 million.
Load factor – a key operating metric – increased 1,100 basis points on a year-on-year basis as well at 77%.
Pre-tax losses for the period ended at £213m compared to the £423m the firm shed in Q1 2021 while the firm burned £450m in cash during the period compared to £969m it burned the previous year.
The company reported that none of its debt will mature at least until 2023 while its net debt stood at £1.2m. Meanwhile, total cash and equivalents ended at £2.9bn.
EasyJet share price forecast: Analyst sentiment
Are easyJet shares a ‘buy’, ‘sell’, or ‘hold’? The consensus rating for EZJ stock compiled by MarketBeat as of 2 March stood at ‘hold’ with eight out of 14 analysts rating the stock a ‘buy’ while four rated EZJ a ‘hold’. Another two financial institutions gave EZJ a ‘sell’ rating.
The average easyJet stock price forecast from analysts was set at 734.5p per share resulting in a potential 34% gain from its last closing price of 546.20 (as of 1 March) if that target is hit. The highest 12-month target stood at 900p while the lowest was 460p per share.
After easyJet released its latest trading update on 27 January, analysts from Hargreaves Lansdown wrote:
Commenting on the company’s prospects, Mikhail Karkhalev, analyst at Capital.com, said:
Meanwhile, algorithm price forecasting service Wallet Investor shared a bearish easyJet share price forecast 2022 and beyond (as of 2 March 2022). It expected the EZJ stock price to decrease to 483.19p by the end of 2022, and move further downwards to 337.19p in 2023, and 50.13p by the end of 2025.
Although the service did not provide targets for 2030, its five-year easyJet stock price forecast suggested the price could collapse to zero in February 2027. Note that algorithm-based estimates are created by analysing the stock’s price action, disregarding fundamental factors.
When looking for the easyJet stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Projections are based on making a fundamental and technical study of the stock’s performance. Past performance is no guarantee of future results.
It’s important to do your own research and always remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest more than you can afford to lose.
FAQs
Is easyJet stock a good buy?
EasyJet is a major player in the European commercial aviation industry, offering low-cost flights to customers within the region. The company is still struggling to recover from the hit it took during the pandemic. Its fundamentals seem robust as its long-term debt is standing at manageable levels.
That said, both the virus situation and the Russia-Ukraine conflict are introducing a fair degree of uncertainty to the stock’s outlook that could keep affecting the valuation of EZJ down the road and this should prompt investors to proceed with caution.
Why has the easyJet share price been falling?
The price of EZJ stock declined in February amid an escalation in the armed conflict between Russia and Ukraine. Meanwhile, the virus situation remains a looming threat to the firm’s operations even though the health crisis seems contained at the moment.
Will easyJet shares go up or down?
No-one knows for sure and analyst predictions can always be wrong. However, their consensus view as of 2 March was that the stock price could increase more than 30% to $734.5p over the coming year, as data from MarketBeat showed.
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