EasyJet Shares Down 14% YTD: Here’s Why the Stock is Struggling

EasyJet's (LON: EZJ) share price has taken a hit this year, falling by 14%. While the airline industry as a whole has faced challenges, several factors have specifically impacted EasyJet and low-cost airlines.

Of course, the pandemic was a severe blow to the aviation sector, and EasyJet was no exception. Much like other airlines, to weather the storm, the company was forced to raise capital.

The memory of these financial pressures lingers, casting a shadow over investor confidence.

Furthermore, the woes of rival Ryanair have had a ripple effect on the entire industry. Similar challenges faced by Ryanair have raised concerns about the broader economic health of the budget airline sector.

In July, Ryanair reported that profits fell by almost half in the three months to the end of June, with ticket prices plunging 15% from the same period last year. The news increased fears of a weak summer for European airlines.

As a direct competitor, EasyJet has not been immune to these industry-wide headwinds.

While the travel industry has rebounded strongly post-pandemic, EasyJet has struggled to regain its pre-crisis momentum. These factors combined have contributed to the decline in the company's share price.

Even so, analysts remain mostly bullish on the stock, with data compiled by TradingView showing that 15 out of 20 maintain a Buy rating on the company's shares, with the average price target of 652.4p representing a potential 50.6% upside from current levels.

In March this year, UBS named EasyJet as one of its top picks, saying it should continue to benefit from a return to pre-pandemic flying trends.

The bank also believed “the easyJet holidays division has seen material growth in volumes,” and they expected the “profitability of the division to more than double over the medium term.”