Analysts at Deutsche Bank have downgraded their rating for easyJet PLC (LSE:EZJ) to 'Sell' from 'Hold' and reduced their target price for the budget airline to 330p from 415p in a review of the European transportation sector.
In early trading on Tuesday, easyJet shares were 1% lower at 376.10p.
In the note to clients, the German bank's analysts said: "We think that 2023 could be a volatile year for share prices with y-o-y earnings growth likely to bottom in 2Q23 and our DB economists and strategists forecasting a 27% fall in the Stoxx 600 in 3Q vs 2Q23.
"Feedback from our annual BLT Conference in London on 22nd November was that investors are generally positioned cautiously into the first half of 2023, with the potential to become more bullish in the second."
The analysts pointed out that in March 2022, they downgraded the airlines and freight & logistics sectors from an overweight to a neutral/underweight stance.
They said in their latest review: "We remain cautious on the EU Transport sector for the first half of 2023 and our top buy picks focus on quality names that we think will emerge from the downturn stronger, those that are able to hedge inflation (Vinci), those with flexible costs bases (DSV) and strong balance sheets (Deutsche Post DHL and Ryanair)."
"Conversely," the analysts added, "our top sell recommendations easyJet and IDS (International Distributions Services PLC) are geared to the UK consumer and have a high degree of operating leverage."
For Royal Mail owner IDS, the Deutsche Bank analysts, however, upped their target price to 160p from 120p while reiterating their 'Sell' recommendation.
Among other changes in the note, the Deutsche Bank analysts raised their target price for International Airlines Group PLC to 155p from 140p, maintaining a 'Hold' rating on the owner of British Airways and Aer Lingus; they upped their target for Wizz Air PLC to 2,550p from 1,950p, also maintaining a 'Hold' rating; and they hiked their target price for Ryanair to €16.0 from €14.5, while retaining a 'Buy' rating.