Financial Trading Blog
Stock of the day 25/03/2015 – easyJet PLC
After opening 2014 at £15.41, easyJet suffered some hefty declines in the first half of that year; however, the now infamous oil-price-crisis proved to be a massive boon to the stock, ensuring it ended 2014 higher at £16.63. In fact, through this commodity-based boost EasyJet’s stock price is up 42% in around 6 months.
easyJet opened 2015 at £16.77 but quickly hit a year low in the mid-January market slump, hitting £15.97. However this didn’t last long, and by the end of that month easyJet had reached a 2015 peak of £19.25; this price was too high to be sustained, leading to a relatively flat February before positive comments in mid-March pushed the stock higher once more, with it currently trading at £18.85.
This mid-March growth was inspired by a speech from chief executive Carolyn McCall to investors at Barclays. McCall played down the threat from Ryanair’s expansion (easyJet is likely helped by the fact that the its name doesn’t carry as much negative baggage when compared to its low-cost rival), whilst playing up the fact that UK leisure demand is strong, or at least strong enough to compensate for the weak euro. These comments led to a £1.50 increase in the stock price over 9 days.
The company has been helped by its takeover of Flybe’s London Gatwick slots, which resulted in a 15% capacity over summer. easyJet is aiming to improve its yields in this area over the 2015 summer season, and any signs of this intent in its statement tomorrow will likely be well-received. Its moves in Gatwick have not been easyJet’s only airport expansion; it has also been increasing its hold in Rome’s Fiumicino airport, and should reach a high of 37 destinations by the summer, despite stiff competition from Spain’s Vueling Airlines.
On top of this comes the news that analysts are expecting 16% earnings per share growth in 2015, with another 13% the following year. The positive moves the company has been backing of late, combined with the consolidation of its position as the UK’s largest airline and the unexpected aid from cheap oil has caused analysts to give easyJet an average rating of ‘buy’ with a consensus price target of £15.40.
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