EasyJet Share Price Fell 2.12% Amid BofA Double Rating Upgrade

The easyJet plc (LON: EZJ) share price fell 2.12% today despite a recent double upgrade from Bank of America analysts, who upgraded it to ‘buy’ from ‘underperform’. The double upgrade refers to the analysts skipping the ‘perform’ rating and going directly for a ‘buy’ rating. 

The positive change in outlook is attributed to a combination of factors that are expected to favor the airline's performance. 

The analysts at Bank of America identify three main drivers behind their optimistic outlook for easyJet. First is the anticipated increase in the airline's capacity. This expansion is seen as a strategic move to accommodate the growing demand for air travel. 

Secondly, the stability in fuel costs is considered a significant positive. Fuel expenses represent a major operational cost for airlines, and stability in this area can lead to more predictable and manageable financial planning. 

Lastly, the expectation of more people opting for holidays and consequently, an increase in air travel demand, forms the third pillar of this positive forecast.

In terms of financial projections, Bank of America has revised its profit forecast for easyJet upwards by 14%, setting the new target at £549 million for this year. This adjustment is based on several factors, including an improvement in load factors – a measure of how full the planes are.

The bank now estimates that easyJet's planes will be, on average, one percentage point more occupied than what was previously anticipated. The growth in profits is expected to be fueled by a combination of an increase in passenger numbers and rising average seat prices (ASP). 

EasyJet has set an ambitious target to grow its passenger numbers by over 35% year-on-year. Bank of America's analysis aligns closely with this target, projecting a 36% increase. Furthermore, the airline is also expected to benefit from an increase in seat prices, which will contribute to its revenue growth.

In summary, the convergence of expanded capacity, stable fuel costs, and an uptick in holiday travel forms a synergistic trio that positions easyJet favorably in the eyes of Bank of America analysts, prompting a notable upgrade in the airline's rating.

EasyJet share price. 

The EasyJet share price fell 2.12% to trade at 507.8p from Thursday’s closing price of 518.8p.