easyJet PLC sent mixed messages in last week’s third-quarter earnings, indeed confirming record profits during the period, but also hinting to a worsening operating environment.
Following the update, Deutsche Bank analysts signalled positivity from the FTSE 250-listed airline so far may not be “good enough”.
Leaving easyJet’s share price target of 585p unchanged, Deutsche focussed on the airline’s warning of challenging conditions this summer, prompted by air traffic control disruption and strikes.
“The benefit from uplifts in holidays profit before tax and airline revenues [will be] offset by an extrapolation of higher airline non-fuel unit costs,” the German bank noted.
Deutsche’s pre-tax profit forecast was raised slightly by £10mln to £460mln though, with holidays now expected to bring in an extra £30mln for easyJet at £110mln.
However, lower revenues due to a reduction in anticipated fourth-quarter passenger traffic and higher fuel costs paired with disruption could bite, analysts warned.
Profit forecasts for the years ahead were left unchanged as a result, Deutsche said, despite the airline’s strong post-Covid recovery so far this year.
Deutsche’s price target would mark a prospective 23% rise in the shares from Monday’s opening meanwhile, with the stock subsequently falling 2.4% during morning trading.